A clipping path is a vector path that sits on top of a bitmapped image (it's saved in the same file). The clipping path tells a page layout program like PageMaker, Quark, InDesign - and illustrations programs, FreeHand, Illustrator what parts of an image to display. Those parts of the image inside of the clipping path show up when the image is placed in the page layout program, those outside the path don't. You can still see the entire image in your photo editing program.

Why would you want to do this? Without a clipping path, you get a square or rectangular image in your layout program. With a clipping path, you can have an image with any shape you like. You can also use a clipping path to "punch" holes in an image and let any underlying text or images (such as a background) show through the holes.

Clipping paths are usually created in the same program you use to edit an image (Photoshop being the big guns). Photoshop can save an image with a clipping path in TIF, EPS, and native Photoshop formats. I don't use GIMP much, and I don't recall if it can make clipping paths.

Jpeg images also support this feature. I always wondered why developers of web browsers never took advantage of displaying cropping paths in jpgs.

Nope, can't get it to work.
I know what a clipping path is, and I've got one in a TIF - but the effect doesn't happen- what exactly should I do to make sure the clipping path is saved in the file so it gets picked up by the System Prefs?