Paul,
It sends the guitar’s signal to the effects pedals for processing, then back to the guitar before the signal goes to the guitar’s volume and tone controls. In doing so, you don’t have loss of signal output that can occur with some pedals (i.e., volume remains consistent with and without effects pedals engaged). It is useful for Further, Tribute, and other guitars with onboard effects loops.
From the FAQ page:
Effects loop
The effects loop is an interesting feature that allows you to insert or delete an outboard effect (pedal or other similar unit) with a switch conveniently located on the guitar. A TRS stereo cable transports the signal both to and from the effector through a single cable. The signal from the volume control feeds the effects send on the tip of jack. The signal returns on the ring. The effects loop switch selects between the unmodified signal and the effected signal.
