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Special Effects often abbreviated as SFX, are illusions or visual tricks to simulate events in a story or virtual world, in Angry German Kid episodes, SFX can be used to make the character move or do something, it can be easily done in Sony Vegas by just dragging the Special Effect to the video clip you want it to effect.
It is commonly used in AGK parodies where a character simply has to move around on a background often found in Google Images, more advanced parodists can make better SFX to improve their episodes and make the parodist more popular.
Most Special Effects are taken from green screen videos or GIF files.