Clipping is what happens when an audio signal exceeds the maximum a device or a digital format can represent and the peaks of the waveform are cut off. On digital outputs in particular it is easily heard as harsh distortion or breakup, so unintended clipping should be avoided at every stage of recording, mixing, and exporting.
Digital clipping
In fixed-point digital audio, the largest value that can be represented is 0 dBFS. Samples that try to exceed it cannot be stored correctly, and the waveform ends up flattened. Even a momentary peak can cause hard distortion or clicks.
Inside the DAW versus the final output
In a DAW that uses floating-point processing, a channel that goes over 0 dB partway through can still be recovered if you turn it down later. But recording inputs, D/A conversion, the master output, and fixed-point files cannot exceed their limit. Always check the meter on the final output.
Clipping while recording
If the input circuit or the A/D converter clips while you are recording a microphone or an instrument, lowering the fader afterwards will not remove the distortion. Set the input gain with the loudest part of the performance in mind, and record with headroom left on the peaks.
How limiters fit in
A limiter can be used to hold peaks down before they clip. It will not, however, restore a waveform that was already recorded clipped. Repair software can sometimes make it less noticeable, but the lost waveform cannot be fully recovered.
Keep it separate from intentional distortion
Clippers and distortion effects deliberately reshape the waveform as an effect. Even then, check separately that the processed output is not clipping again unintentionally. Set the gains in order from the front of the chain, and judge with both the level meter warnings and your ears.
