Also called drawn butter, this is unsalted butter that has been slowly melted, thereby evaporating most of the water and separating the milk solids (which sink to the bottom of the pan) from the golden liquid on the surface. After any foam is skimmed off the top, the clear (clarified) butter is poured or skimmed off the milky residue and used in cooking. Because the milk solids (which make butter burn when used for frying) have been removed, clarified butter has a higher smoke point than regular butter and therefore may be used to cook at higher temperatures. Additionally, the lack of milk solids prevents clarified butter from becoming rancid as quickly as regular butter. It also means that the butter won't have as rich a flavor. Ghee is an East Indian form of highly clarified butter.
From The Food Lover's Companion, Fourth edition by Sharon Tyler Herbst and Ron Herbst. Copyright © 2007, 2001, 1995, 1990 by Barron's Educational Series, Inc.