Butter is a common ingredient in food that is made from the cream found in the milk of animals, with cow being the most common. It is made by churning the cream to create a solid of butterfat, milk solids, and water. The solid, called butter, is removed from the liquid called buttermilk. Commercially available butter is often salted and pressed into the shape of a block with the volume of 1/2 cup.
Clarified butter is the butterfat from butter where the milk solids and water have been removed. Clarified butter has a higher smoking point to allow it to be used for cooking in high heat. It also has a longer shelf life than fresh butter, and removes lactose and casein from butter which can cause allergenic reactions to some.
Clarified butter is typically made by melting to butter over low heat to cause the water to evaporate, some of the milk solids float to the top, and the rest of the other milk solids sink to the bottom. The floating milk solids are removed by skimming, and the milk solids at the bottom are filtered out.
Ghee is clarified butter that has been cooked longer to cause the sinking milk solids to caramelize which results in clarified butter with a nutty flavor.