This is both the simplest and oldest modulation effect, originating with the tremolo circuits found on many classic Fender amps of the 50s and 60s. An oscillator simply controls the output volume in a standard tremolo circuit - the result can be subtle or stark depending on the waveform used and the rate and depth settings. A sine wave sounds smoother than a square wave for obvious reasons - some pedals allow continuous variation from one shape to the other.
Depth controls the volume reduction produced by each trough in the waveform - a maximum setting produces a rhythmic chopping effect in the manner of The Smiths How Soon Is Now? or Green Days Boulevard Of Broken Dreams. Rate controls the speed of the rhythm produced.