Art direction is largely responsible for the visual look of a film. Generally an art department is in charge of things like designing costumes and sets and helping with lighting--generally helping with the appearance of everything that is in front of the camera. The art department also works with many other departments, like construction departments, to ensure everything goes smoothly after designs leave its hands.
Art direction is a big part of what helps a movie achieve its identity. A movie that is forgettable in every way is obviously not likely to be one of a person's favorites. However, a great script, great production values and art direction can all keep them in your mind and help to make a movie a person wants to watch over and over again. Movies have a certain "look" and "feel" to them, which makes them visually interesting and therefore interesting in general to the viewer. That's not to say a movie with brilliant art direction can make up for a bad script, bad acting and horrid direction. It can't. But it can make for an extremely beautiful-looking bad movie.
Work on the art direction of a film begins in the preproduction phase--several months before the movie begins shooting. At this time a team of artists and designers will begin to work on what the sets, costumes and makeup will look like throughout the entire movie. Often they will work directly with the director and the cinematographer in planning out the specific camera positions and angles in each shot. They are available all during production, which is when the movie is actually filming, in case changes arise or things need to be added or subtracted from the film.
A general misconception about art direction is that the art director is in charge of this department. In the world of film, that is not necessarily the case. Often the production designer fills the role everyone attributes to that of the art director.
The effects of quality and unique art direction are many. For starters, they can help give a film a specific visual flair that will set it apart from other movies. For example, two movies known for their art direction are David Fincher's "Se7en" and Wes Anderson's "The Royal Tennenbaums." These movies look nothing alike, but they both have their own special look and feel that help make them unique and interesting to watch. A movie with standard, generic art direction may not stand out in your mind as much as these two movies do. Extremely well-produced art direction can also lead to recognition within the industry and awards like the Oscar.