Screencast: Transitions and Effects
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An effect works on a single clip, sometimes only affecting the beginning or end of the clip. Transitions require two clips to be next to each other.
There are a lot of effects in the library, but we'll stick with fading in and out, which is a simple example.

Select a clip with a mouse click.
First, make sure the Collections sidebar is showing (View > Collections), and then choose the Video Effects folder.

Single click one of the Fade In or Fade Out effects.
Choose Clip > Add to Timeline (Ctrl + D) to add the effect. Alternatively, you can Drag and Drop the effect onto the clip.

The blue star indicates that an effect has been applied — you can add more than one effect to a clip.

If you right click on the video portion of a clip, you can select Fade In or Fade Out (to black).
There are a lot of transitions in the library, but we'll stick with a simple fade between two clips.
Drag the playhead to a spot between two clips.
First, make sure the Collections sidebar is showing (View > Collections), and then choose the Video Transitions folder.

Single click one of the Fade In or Fade Out effects.
Choose Clip > Add to Timeline (Ctrl + D) to add the transition. Alternatively, you can Drag and Drop the transition between the clips.

The small grey strip indicates that a transition has been applied to the clips.