Effects loop bassicly tap into the signal path at least after the 1st or 2 gain stages sometimes after the entire pre-amp.The main idea is that you don't distort and degrade whatever effect you may wish to use in the amps first couple of gain stages which are normally the hottest, this is great for stuff like reverb,delay and wah etc because you dont end up distorting the effect if you have an amp with a high gain front end as well as not excessivly ampflying any white noise all pedals create.
That being said not all effects loops are usefull, all the ones i have tried on budget amps are next to useless, but the fully controllable from series to paralell, tube driven effects loop on my top notch amp is very handy indeed. much better results when using delays,flanger,reverb,trem or wah that plugging straight into the front end.
