Novelty yarn covers wide range of items. Things with bobbles, beads, feathers, eyelash.. pretty much anything that isn't standard type of yarn.
Novelty yarns are generally used as accents (they come in tiny balls with huge price tags sometimes) or carried along with the regular yarn to create an effect.
These patterns show some of the typical types of novelty yarn:
http://www.discontinuedbrandnameyarn.com/shop/index.php?main_page=index&cPath=191_197