Difference between Costs and Effects

Typically, Costs are determined at Activation, while Effects are determined during resolution of the card.

Example: Cost
Magical Stone Excavation: Discard 2 cards. Add 1 Spell Card from your Graveyard to your hand.

Notice here, that the controller is required to Discard 2 cards in order to meet the Activation Requirement for the card in question. Then, during resolution, the Spell Card is added to the hand.

Example: Effect
Graceful Charity: Draw 3 cards from your Deck, then discard any 2 cards from your hand.

Now here, there is tecnically no cost for activating the card, since Drawing cards is not considered a cost. This also means that the 2-card discard is treated as an effect.