I'm not positive I fully understand everything you're saying. "Effective" in what regard? A well set-up fretted instrument will stop the string cleanly and easily. But I'll answer to the best of my ability.
When playing a fretted instrument you are indeed playing above the fingerboard/fretboard - the string won't touch the wood unless you're pressing pretty hard or the frets are very low. As far as the vibrating string is concerned, the fretboard is there primarily to hold the frets in place and the result would be similar if you were somehow able to suspend the frets in mid-air. I think that most people's fingers brush the fretboard itself to varying degrees while playing, which can be a tactile aid to navigating the neck accurately, but there are designs (such as the scalloped fretboards that seemed to gain some popularity on guitars in the '90s) that minimize even this contact.
As for fretless... it just feels different. It's a different tactile/aesthetic experience. The most obvious differences are in the quality of attack and the ability to slide between notes. And, yes, it is possible to play more in-tune* (and out-of-tune) on a fretless. I don't think that most people who consider playing fretless do so because of perceived technical advantages over a fretted bass, but because they're attracted to the sound and maybe the feel and the idea of developing the technique involved and being responsible for their own intonation.
I've been playing fretless bass for a few months now (though I have a previous background in cello and doublebass). Only recently have I started to feel confident taking it out in public. At first I felt mostly limitations but now I find I prefer it about half the time and that it affords me more freedom in some kinds of music. Tonight I'll play at a jam and take only my fretless bass.
I do find that physically complex chords -- especially in a series -- are much more difficult on fretless. Frets offer you a lot of leeway when you're piling fingers on top of each other.
-Mark
P.S. You say you've never played a fretless before. I, too, for a long time, limited my fretless inquiries to the theoretical. The best way to satisfy your curiosity is empirically -- go find one and play it!
*Try this on a fretless: tune your instrument well. Play your G-string. Now play C on the A-string, a 5th below. Tune that to perfectly match the G. Let that be the root of a C-Major chord. Maintain the position of that C carefully, and play E on the D-string, a 3rd above. Tune it to the C. Now hold that E and play it with the open A-string (E is the 5th now, not the 3rd). Is it in tune as is, or do you have to adjust it?
Curious - When playing a fretted bass, classic instruction "dictates" and practice reveals that pressing the string close to the fret achieves best results.
It seems to me however that the action of pressing the string against a fret wire seems to be a very (for lack of better term) ineffective method, given that the surface area contact between string and fret wire would be small, not to mention the fact that the fret wire sits ABOVE the fingerboard.
With a fretless instrument, is this action IMPROVED as a result of the fingerboard being a "singular surface"? Is this part of the fretless appeal? I have never played a fretless bass, so I would not know.
Thanks.
Chris
EDIT: While typing my long-winded reply, the True Temperament links above were posted, which puts your inquiry into context.
