The main difference between Filter and Effect is Effect is more flexible where the object can be modified using Appearance palette (Window > Appearance) but this process uses to much of the computer's memory and processor's power.
In the other hand, Filter will immediately and totally change the object's anchor points and path segments and you won't be able to modify the changes after applying Filter. Applying Filter to an object is much more faster than applying Effect (if the object is complicated with many paths)
Below is an example of the difference.
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