Different school's have different levels of contact rules during sparring. (ex: no contact, light, moderate, and full) Why is this?
You would have to ask the owners of those schools. I would guess you would get as many answers as people you ask, though.
Are all contact levels effective?
Effective for what?
Our school only allows up to moderate level strikes. We had a black belt from Germany come to our program and his school had only no contact sparring. At first he was a bit awkward with the contact, but after a month he was actually pretty good. I don't know if that was just a specific case, of his ability do adapt to our style, or if it isn't an easy transition to be able to go from different levels of contact. So for example if you have never made contact during sparring will you be able to adapt to a situation were you need to use full, or lethal contact on the street, or any dangerous situation?
That's another question that I doubt you will get a consensus answer to, because I doubt that there *is* one answer that fits every situation.
There are some self-defense techniques, I am sure you know many of them as well as I do, that cannot be performed 'full force' in the dojo. Breaking elbows and knees and collarbones, for example, is frowned upon. Yet if we find ourselves in a self-defense situation, we may wish to do exactly that? How, then, should we train so that we can instantly apply deadly or very damaging techniques on another human being, without having done it 'for real' in the dojo?
I do not think there is a good answer for this.
In general, I believe it is good to practice with some contact in the dojo. At least enough to understand when a technique is working and when it is not. To be hit with enough power to understand something of what it is like, to hit with enough power to get a notion of how the opponent reacts, how the hit feels, and so on.
I know that over time, my power, speed, and precision have increased. I am no master, I am only a student, but I do know that when I hit or kick now, if I do not restrain myself, I hurt people. I presume that means that if I had to do it 'for real' I would NOT restrain myself and I would in fact hurt people; hopefully the right people for the right reasons. Would I 'hold back' as they say, 'on the street'? I do not know for myself, but I know that some of my dojomates have had to apply their training in self-defense situations and it worked for them. I can only hope it will work for me as well.
But this is guesswork, based on some limited experience and observations and listening to others describe their experiences.
In the end, I cannot train 'full force' and would not want it done to me. I am a martial artist, but I am also a 54 year old man who has to go to work in the morning. I don't mind explaining the occasional bruise or black eye or why I am limping a bit, but I have to be able to type, I can't have broken bones and permanently damaged joints and so forth. If that was required, I'd stop training. I am too old for that nonsense anymore. If my training, which is moderate contact but not full-force is not sufficient, then oh well. It is what it is.