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Images below the fold (the ones lower than window bottom) are not loaded. When scrolling down they are loaded when needed. Images appear using fadein effect. Empty cache and shift-reload to test again. Compare this to page where plugin is without effects.

$("img.lazy").lazyload({
    effect : "fadeIn"
});
<img class="lazy" data-original="img/example.jpg" width="765" height="574">
BMW M1 HoodBMW M1 SideViper 1Viper CornerBMW M3 GTCorvette Pitstop