Almost since the invention of the electric guitar, artists were exploring ways to make unique new sounds with the instrument. Early attempts included putting holes or tears in speaker cones to distort the sound, and progressed toward pushing the amplifier itself into "saturation" or "overdrive", beyond the point where the circuit is able to accurately reproduce the natural waveform of the guitar.
Simple control pedals, such as volume and tone pedals, were around very early in the evolution of magnetic pickup instruments, and were used mainly by lap steel players in the country-western genre. DeArmond made the first true guitar effects pedal, a tremelo, in the 1940s.
Most of the sounds we now use effects pedals to create were originally mistakes. Small variances in the recording speed of multi-track studio tape recorders, and latency between the recording and playback heads of the tape machine, resulted in time and phase-shifting "effects" on studio tracks that came to be exploited by the musicians intentionally beginning in the mid-60s. We now call these sounds chorus, flanging, phasing and delay/echo, and achieve them through the use of solid-state timing circuits.
Today, a large variety of classic and newer tone-altering effects are available in a wide variety of subtle variations.