A practical effect is anything captured on film which has not been achieved in post-production. In its broadest sense it includes anything an actor, makeup artist, set designer, director or other member of the crew has captured on screen during principal photography. For instance, if one wishes to depict flames, the practical way of achieving this is to start a fire and film it.
Doctor Who has historically used practical effects to a much greater degree than many other science fiction shows. For instance, much of the backgrounds on the opening titles until the 18th season are practical, because they were achieved by pointing a camera at a monitor and filming the results (a few of them, however, had several elements filmed in separate passes - The most practical of all opening titles sequences of the series were in fact the slit-scan versions used in 1973-74 and 1974-80). Most monsters seen on the original series are also practical, because they were filmed alongside the actors in a given scene. A number of the video screens seen in the show are practical, in that the film on the screen was actually being played back on the screen as the actors in the foreground looked on.
Since 2005, however, Doctor Who has relied less on practical effects and more on post-production help from The Mill.
A practical effect is usually considered the antonym of a "visual effect".