Effects modify the sound in various ways, some of which I'm not too clear about. There are four ways effects may be requested and two ways you can control them.
A midi song may specify an effect for all the instruments playing on any particular one of the 16 midi channels. Or, it may specify several effects for several channels. When you click down the panel's ``eff'' button, the signal is filtered to approximate the midi effects: chorus, reverberation, celeste, and phaser. But there won't be any effects unless the song in the midi file asks for them. Two of the standard midi effects, harmonics and brightness, are not yet implemented by filters. (The filters were coded by Nicolas Witczak.)
When you don't click down the ``eff'' button, you still get some chorus and reverberation on channels where it's requested, but it's done in a different way. Now, instead of using filters, extra notes are generated. They are detuned slightly for chorus effect and delayed slightly for reverberation. There are also some adjustments made to note envelopes and vibrato. With ``eff'' turned off, you get no channel celeste or phaser effects.
A second way effects may be requested is by a patch. That is, an instrument patch may contain a suggested chorus and/or reverb level. AWE patches generally do specify effects, but Gravis-Forte patches don't. (That's why AWE patchsets tend to sound a bit fruity.) Effects requested this way are done by the ``ghost note'' method, and are unaffected by the ``eff'' button.
Thirdly, you may request effects. Notice the four checkboxes at the right of the panel. Each has three states: ``normal'' (the default), "extra'', and ``off''. The middle two checkboxes control chorus and reverb. If they are set to ``normal'', effects are treated as described above. Set to ``extra'', extra notes are generated for chorus or reverb for all instruments and all channels, and this is in addition to the effects filters if they are requested by clicking ``eff''. When they are set to ``off'', no extra chorus or reverb notes are generated.
Finally, effects may be requested by midi system exclusive message in a midi file -- ``sysexes''. These are intended to control the hardware of specific synthesizers. KMidi does a certain amount of decoding of sysexes for Roland GS synths and Yamaha XG synths and does its best to modify the sound accordingly. Chorus, reverb, and variations on these are done by the ``ghost note'' method and can be switched off with the checkboxes just mentioned. However, when the celeste variation of chorusing is requested in an XG sysex, this invokes Witczak's celeste filter, provided the ``eff'' button is clicked on.