Status effects are buffs or debuffs that help or hinder the Freelancers in various ways, depending on the particular status effect. Some confer increased or decreased damage dealt, improved or hindered movement and other similar things.
Status effects can be applied to a Freelancer through two separate sources.
The main way that a Freelancer receives a status effect is through their own or other Freelancers' abilities. Many abilities in Atlas Reactor give buffs or debuffs to allies or enemies respectively, either directly or indirectly. This can be both part of the baseline ability or a Mod.
Another way to gain beneficial status effects is through picking up power-ups on the map. This can be either the fixed buffs that spawn on every map or mini-powerups created through Freelancers' abilities.