Effective key size is a practical measure of cryptographic strength. Instead of describing only the nominal length of a key, it estimates how hard a system is to break using the best known attack. If a 256-bit cipher has a known shortcut that reduces the work to something closer to 120-bit security, its effective key size is about 120 bits, not 256.
This matters because defenders and standards bodies care about real attack cost, not just design labels. In cryptography research, a new method may reduce the effective key size of a scheme or a reduced-round cipher, signaling that the margin of safety is smaller than expected. Attackers look for exactly these shortcuts, while defenders use the metric to compare algorithms, choose safer parameters, and decide when a primitive needs more scrutiny, migration, or replacement.