Clipping is one form of distortion that occurs when an amplifier is overdriven, which happens when it attempts to increase voltage or current beyond its limits.
When an amplifier is made to create a signal greater than its maximum capacity, it will amplify the signal only up to its maximum capacity, at which it will reach a point where the signal will be amplified no further. As the signal simply "cuts" or "clips" at the maximum capacity of the amplifier, the signal is said to be "clipped." The extra signal which is beyond the capability of the amplifier is simply cut off, resulting in a fixed signal.
Because the clipped waveform has more area underneath it than the smaller unclipped waveform, the amplifier produces more power in clipping. This extra power can damage any part of the loudspeaker.