I apologize to the epidemiologists and biostatisticians out there for this simple explanation, but here's how I understand it: Let's say you find a variable (coffee drinking) to be a risk factor for a disease (myocardial infarction). It's possible that coffee drinking itself may not be a risk factor, but rather it may be masking the effect of another variable, like smoking: It is possible that people who smoke are more likely to drink coffee. If coffee drinking is not found to be a risk factor for MI after controlling for the effect of smoking, then coffee drinking is a confounding factor.
Let's continue with the same example, but this time, when the effect of smoking is controlled for, coffee drinking is still found to be an independent risk factor. In addition, as it turns out, coffee drinking actually magnifies the effect of smoking: Somebody who both smokes and drinks coffee is found to have a much greater risk than smoking or drinking coffee individually. This would be an example of effect modification.