"Clipping is a form of waveform distortion that occurs when an amplifier is overdriven and attempts to deliver an output voltage or current beyond its maximum capability."
This can manifest in several different ways, and on this forum most people are probably talking about driving the McIntosh (the power amplifier) or JBLs (the speakers) in such a way that they clip. This is accomplished simply by turning the volume up fairly high on the power amp. For Jerry tone, I don't think that many people use preamp clipping, as he didn't really utilize that.
Pedals and master volume circuits duplicate clipping by saturating some component (transistors, diodes, tubes, etc.) and this will sound distorted.
For more on the topic, look in to asymmetrical vs. symmetrical clipping, odd vs even order harmonics, and some other things that I can't remember to mention.
"Learn as if you were to live forever; live as if you were to die tomorrow."
Just about every note in this show below is Jerry clipping his Mac, but start about 8:35 and just listen to how the notes breakup for the next several minutes. This is, to me, the sound of the needle on the Mac pinned hard and those transistors clipping. My kind of 80s tone! It took me a long time to understand the Jerry clipping thing but I think I've got a handle on it now...mostly thanks to Waldo helping me with my experiments. This particular Mac circuit (MC2300, 2105, 2100) has a great clean sound but its clipping is, IMO, what makes it special.
The only problem, of course, is that if I want to approximate this with my own rig it will cause permanent deafness, vertigo, possible blindness and guaranteed eviction notices. I know from experience (except for the eviction part...though my dad was driving to visit me during the summer, had his window down driving down the street and started to hear me doing a tone test, with earplugs, about a quarter-mile away. He was astonished. I'm sure my neighbors have contemplated police action). But with that needle pinning on my modded MC2105 is the closest I've ever gotten to THE TONE.