This regards both the damage_effect tag and projectile tag for a weapon's projectile. I just want to make sure I know exactly what these different fields do, because it's hard to test in-game. Here's what I THINK these fields do, and I want to know from you all whether or not I'm right.

Damage_effect tag:
Damage lower bound: Absolute minimum damage, outside maximum air damage range.
Damage upper bound: Minimum upper bound damage, then maximum possible damage.

Projectile tag:
Air damage range: Minimum distance where maximum damage takes place, then maximum distance where minimum upper bound damage takes place.

I'd like to know if my understanding of these tag fields is correct or not. These fields could be used to making a projectile which has controllable damage drop off (does less damage if you hit a target from farther away) for weapons that rely on range, like the shotgun.

You mean the "can cause headshots" check box? There's also something in the collision tag where I can apply damage multipliers based on where you shoot, for example if you shoot an enemy in a sweet spot you do double damage. That might be what you're referring to.