Essentially, deforestation occurs from two sources: clearing (chopping down) trees and burning (fires). The latter isn't always caused by humans; it could be caused naturally by such as lightning.
The adverse effects of deforestation are too numerous and involved to be listed here. Here are some articles that explain the process and its effects in detail:
http://en.wikipedia.org/wiki/Deforestation#Atmospheric
http://www.umich.edu/~gs265/society/deforestation.htm
http://earthobservatory.NASA.gov/Features/Deforestation/
http://www.nationalgeographic.com/eye/deforestation/effect.html
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