When the amplitude of a signal reaches some limit determined by the equipment in use, it hits a ceiling (and floor) beyond which it cannot proceed. So the top and bottom of the wave is simply lopped off. The more it attempts to exceed the limit, the more that's chopped off, and the closer to a square wave the formerly rounded wave begins to look. This causes it to generate lots of harmonics, and so it sounds very distorted. The graphic to the right shows a sine wave at the left, and then the same sine wave amplified by just three decibels, to the right. This relatively minor clipping generates a third harmonic of 14%, a fifth harmonic of 3%, a seventh of 1.8% and so on. Truly awful sounding. Clipping is often caused by turning up an amplifier too loud so that its power limits are exceeded.