Clipping is when your amplifier/preamp fails to reproduce the complete amplitude of a sinusoidal wave. Instead of a nice smooth curve the "tops" are chopped off or "clipped". Imagine some nice smooth ocean swells. Now imagine the same waves "clipped" or with flat spots on the crests(and in the troughs as well).
Its real easy to prevent clipping. Just don't make your h/u and/or amplifier attempt to operate beyond its capabilities. In other words "Turn it Down!", either the gains on your amp or volume of your h/u or both.
Yep. It's hard to detect minor clipping, but transistor amps clip pretty quickly(as opposed to tube amps), what I mean is they keep low distortion until the verge of clipping, then they clip HARD. Distortion levels will rise dramatically. Most accurate way is through an oscilloscope with a 0 db reference CD playing. Of course, most don't have a scope lying around, so rely on your ears. Set gains correctly, I don't see a point in not doing so. One of the most common things you see is kids that turn the loudness on, bass boost all the way up, gains set to max, tune the equalizer to the typical "smiley face" then they have the nerve to say "see how loud it is, I'm only on 1/4 volume!" Total stupidity. That's what a volume knob is for. If you tune an EQ, cut, don't boost.(sometimes boost is necessary, but only when you boost VERY minorly, like 1-2 db at a single frequency) Set the gains correctly. If you hear distortion below 3/4 volume, your gains need to be turned down. Once you set this gain, don't turn the volume above 3/4 and you'll be ok, but if you ever hear distortion, turn it down.