A signal path out of one piece of gear, through an effects unit, and back into the first device. It effectively is a loop, with an effects processor in the middle. When you send a signal out of a mixer on an aux send to a reverb, and then bring that signal back to the mixer you have created an effects loop, though we rarely call it that in those circumstances. Most of the time the verbiage is used in the context of guitar or bass amps, or guitar or bass preamps. Many of these have a dedicated insert point designed to be used with some outboard processor. In most cases they work just like the insert of a mixer: plugging something in breaks the internal signal routing to send the signal through the external loop.
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