Modulation refers to an entire category of different effects that all have this in common: a dry audio signal is combined with another signal of the same sound that is delayed in time, slowed down or sped up. This makes use of the property that physics describes as interference or wave propagation. This creates phase cancellation and reinforcement. In most cases the degree of change in time itself is constantly and periodically changing, or being modulated. Hence the name "modulation" for this class of effects.
The classic modulation effect is the flanger. This sound was originally created by taking a tape recording of a musical instrument, making two copies of the tape, and loading it onto two different independent tape machines for playback. While one tape machine played back at a constant rate of speed, the second tape machine's speed was subtly slowed down and sped up in a periodic fashion by the engineer applying his thumb to the flange, or the outer perimeter, of the metal tape reel, to slow down and speed up the mechanism. The resulting sweeping sound was the result of the two tapes going in and out of phase with each other. Nowadays the same effect is achieved using analog or digital electronics, not recording tape.
Here is a YouTube video demostrating how the effect was originally achieved.