When we are talking about dramatic effect, we are basically talking about how we experience the play in a theatre.
Shakespeare didn't try to make the play seem realistic and there were very few props or scenery. This means the audience had to use their imaginations. This is most obvious when Desdemona has been suffocated near the end of the play - we think she's dead because Othello 'smothers her'. However, she comes back to life a couple of minutes later to protect her husband, says 'farewell' and then 'she dies' - it is not realistic, but it is dramatic.
Secondly, it is important to remember how people watch a play in the theatre - we can't stop the actors to make a cup of tea, there's no book to put down or DVD to pause. This seems very obvious but it's easy to forget. For instance, in Act 3, Scene 3 we have the build up to Othello's decision to kill his wife. We have to think about how an audience would experience this. Iago only has to make a few, almost casual remarks for Othello to become suspicious. We can see in just a few minutes how Othello's marriage (and his life) is destroyed. A theatre audience naturally feels sympathy for Desdemona, and anger towards Iago. This is exactly what dramatic effect is all about - how feelings are created.