Effective date is the exact day on which a certain law, contract, rule or other legally binding agreement begins. On this date, all parties subject to the terms of the particular thing going into effect are subject to the terms of the agreement.
Effective dates can apply to insurance policies, mortgages, student loans, statutes, etc.
After the effective date occurs, people who violate the terms of the contract, the law, the insurance policy, etc. can be held legally accountable for their violations. Before the effective date, however, they cannot. So, effective dates are often extremely relevant in lawsuits.
Every time a new law is created by the United States Congress, it must come with an effective date. This is to let citizens know when they will start being obligated to adhere to the terms of the new law.