The part that concerns you in car audio is that clipping occurs when your AC signal ( from the amp to the speakers) starts sending distorted power.
Imagine your sound waves as a sine graph.....when distortion occurs the top of the sine wave looses its nice "curve" and is clipped. Thus the name for it...clipping. //content.invisioncic.com/y282845/emoticons/biggrin.gif.d71a5d36fcbab170f2364c9f2e3946cb.gif
Clipping occurs most often when people adjust their gains above the right level or simply ride around witht he HU volume maxxed out.
A good way of preventing this is keeping your gains set correctly (prout of ur HU/linedriver divided by 3 usually gives about the optimal gain setting) and keeping your volume on the HU at 2/3 max.
Hope this helps. ( Need a more theoretical explantion [eletrical] , just pm me)