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The hydrophobic effect is something that I did not understand until recently. Essentially what the hydrophobic effect states, is that hydrophobic molecules will clump together in an aqueous (water) environment. This is because by nature water prefers to be in a state of high entropy, meaning a highly disordered system. When hydrophobic molecules in water the water can not interact with them and the water molecules start to form ordered cages around the hydrophobic molecules. Water does not want to do this because that means that the system is more ordered. In response to this, water forces the hydrophobic molecules to clump together so that in total there is less surface area created by the hydrophobic molecules. This means that less water molecules will be taking part in making the ordered cage around the clump of hydrophobic molecules and since less water molecules are ordered the overall disorder (entropy) of the system is significantly higher. The hydrophobic molecules themselves are not what cause the clumping, rather it is the nature of the water molecules.