You can use Bitmap Effect only on Bitmap Objects (of course). However you
can convert any object to the Bitmap - but you have to have a good reason
You can go to the Bitmap effects by pressing the button on the Color Bar (if you don't see it, just select any Bitmap object) or from Menu Bitmap select Bitmap Effects.
You might want to use Bitmap effect for example to sharpen the image after resizing or change or boost colors etc...There are many effects, some of them are producing interesting results like drawings.
Just be aware this is the only part in the CompactDraw which actually alter the image (the process is not reversible - only Undo of course helps or if the image was loaded from the disk you can use 'Update from original' command from the Bitmap menu.)