Effect

Potion effects are conferred by food items called Potions, which can be brewed using a Brewing Stand in Beta 1.9 Pre-release 3 in order to acquire the effects.

History
Potion effects were introduced in Beta 1.8. There are currently 19 defined "potion effects" in Minecraft. Two are given by Player actions, Two more by food items, One by a Cave Spider's attack, Six others work but aren't used yet, and Eight have no effect. Jeb later tweeted a potential potion effects screenshot taken from within from Beta 1.9 Pre-release 2. Jeb has also tweeted about the Blindness potion effect, confirming its upcoming existence.

According to a tweet by Jeb on September 30th 2011, in Beta 1.9 Pre-release 2 Milk is a cure all that clears all potion effects/status effects.

Parameters
Potion effects are given two parameters on creation: Duration (in ticks) and strength.

Future
In 1.9 Ghast Tears will not cause instant health but regeneration