A clipping path creates a hard-edged mask that hides unwanted image elements. Clipping paths are typically used to hide the background of an image or may be used to shape (crop) an image into different shapes.
Clipping paths can be created in graphics programs then exported with an image as an embedded path or alpha channel or they can be drawn directly in some page layout applications.
In software such as Adobe Photoshop the clipping path is created with Selection tools that draw rectangles, ellipses, or free-form shapes known as a the Selection Marquee. It can be added to or subtracted from using those same tools. The area inside the clipping path or selection is the active area and the area outside the clipping path is the area that is masked or protected from editing or deletion.
Not all paths created in desktop publishing or graphics software are clipping paths.
"A path consists of the general outline of an object. Paths can be open or closed and can be made up of a combination of straight and curved segments." Defining Path, About.com Graphics Software