Ground effect is a term applied to a series of aerodynamic effects used in car design, which has been exploited to create downforce, particularly in racing cars. This has been the successor to the earlier dominant aerodynamic theory of streamlining. American racing IndyCars employ ground effects in their engineering and designs, similarly they are also employed in other racing series to some extent; however Formula One and many other racing series, primarily across Europe, employ regulations (or complete bans) to limit its effectiveness on safety grounds.
In racing cars, a designer's aim is for increased downforce and grip to achieve higher cornering speeds. A substantial amount of downforce is available by understanding the ground to be part of the aerodynamic system in question, hence the name "ground effect". Starting in the mid-1960s, 'wings' were routinely used in the design of race cars to increase downforce (this is not a type of ground effect). Designers shifted their efforts at understanding air flow around the perimeter, body skirts, and undersides of the vehicle to increase downforce with less drag than compared to using a wing.
This kind of ground effect is easily illustrated by taking a tarpaulin out on a windy day and holding it close to the ground: it can be observed that when close enough to the ground the tarp will be drawn towards the ground. This is due to Bernoulli's principle; as the tarp gets closer to the ground, the cross sectional area available for the air passing between it and the ground shrinks. This causes the air to accelerate and as a result pressure under the tarp drops while the pressure on top is unaffected, and together this results in a net downward force. The same principles apply to cars.
The Bernoulli principle is not the only mechanic in generating ground effect downforce. A large part of ground effect performance comes from taking advantage of viscosity. In the tarp example above neither the tarp nor the ground is moving. The boundary layer between the two surfaces works to slow down the air between them which lessens the Bernoulli effect. When a car moves over the ground the boundary layer on the ground becomes helpful. In the reference frame of the car, the ground is moving backwards at some speed. As the ground moves, it pulls on the air above it and causes it to move faster. This enhances the Bernoulli effect and increases downforce. It is an example of Couette flow. If a car were to get turned at a high enough speed, the car would generate lift and possibly make it take off, or "Blow-over".