Elemental Effect Chance is the probability that an elemental gun has to cause the indicated elemental dmg. Keep in mind that there is a "pool" of elemental ammunition, and the more an effect happens the less ammunition that there is left. This is why elemental effects work best with slow firing weapons which allow the pool to refill.
Elemental Effect Chance is effected by the quality of the materials in the gun. This is indicated by the line which contains "Very High/Higher/High"... Obviously, Very High is the best possible variant. Some orange items such as the Maliwan Hellfire and Maliwan Volcano have guaranteed elemental damage and a chance to cause splash elemental damage. This is why they still have the line ... Elemental Effect Chance even though they cause the elemental damage each and every time.