- Positive vs. Negative
- Same-side vs. cross-side
Network effects can be negative: if more people dine at your favourite restaurant you have to wait longer for a table. That's a negative same-side network effect. The reverse is true for facebook: more people signing up means more people to socialise with.
When you add in app developers, then cross-side effects come in to play. More people using facebook is a positive cross-side network effect, because more users == bigger market for developer apps. It's mutually positive too: more developers means more apps, more choice etc. For advertisers, the cross-side network externality is only positive from their perspective: they like having a larger audience to advertise to, whereas users generally don't like ads.
All of these combine to make facebook one hell of a sticky, and lucrative platform.