its when your amp is maxed out and you turn the gains up all the way, you're sending out higher voltage levels and this clips the top and bottoms off the sine wave created by the subwoofer, it both sounds terrible and is bad for the sub. alot of people do this with lower powered amps to try and get as much out of their sub as possible - end up clipping by turning all the gains all the way up
clipping is caused by several things. overdriving the input stage of the amp by having the gains turned too high, or having too high of a line voltage for the inputs, or by a lack of current from the car's charging system.
clipping is when the amplifier's voltage rails sag for whatever reason, and the amplifeir is unable to produce a sinewae signal to the speakers. what happens is the peak and trough of the sinewave gets "clipped" off, producing a square wave instead. electrically, a square wave translates to DC voltage, which causes the speaker voice coils to become a heating element, which in turn tends to melt the coils, cause distortion, and freeze up the cone. In short, destroying your speakers.