Clarified butter, (aka drawn butter), is whole, unsalted butter that is melted down and allowed to separate so that the milk solids can be removed. This clarification process raises the smoke point and makes it great for cooking.
The easiest way to clarify butter is over a water bath or double boiler. This allows you to gently heat the butter to the boiling point (212°F/100°C at sea level). What happens next is the water bubbles up out of the butter and evaporates, and the whey proteins form a "foam" on top.