Are you already rooted? If not best to read the All Things Root Guide sticky and the stuff on routing terminology etc first. Rooting is these days relatively easy but read up on the risks before you do anything, decide if you want to root, read guides again for good measure, ask questions, then take the plunge.
But very briefly (various guides will cover it better than me anyway) Clockwork Mod is a custom recovery that gets installed more often than not (depending on the method you can choose whether to install one or not, and also between different recoveries) as part of the rooting process. This replaces the stock recovery and allows you to undertake more advanced processes like a full backup /restore of your device, flash custom ROMs and kernels, wipe various device partitions and so on.
You need to boot your device in to recovery mode to access the custom recovery and thus use it to install (flash) a custom ROM or kernel. To install a ROM you need to download it and save it to internal storage somewhere, then boot into recovery, do a backup first so you can get back to a working device should anything go wrong, then there's usually instructions on what to wipe in the ROM thread, then option to select the custom ROM to flash via internal recovery file Explorer, flash ROM, reboot device, enjoy.
Sure there's probably a way using particular pattern of presses using Nexus 7 hard buttons to enter recovery mode, but after rooting you might also get a quick boot app which you select the reboot option you want.
Few things I've learned sometimes the hard way
Read up on as much as you can
Ask questions in forums such as this one (which is the best one for help in my opinion, plenty of good folk who know what they are talking about and you won't get a load of responses telling to you use the search tool
Read guides again for good measure
Once rooted do a full nandroid backup first
Did I mention take a backup!
Fwiw I rooted mine using the toolkit linked in the root sticky, and compared to my old HTC Desire it was a breeze as was rooting my SGS3.
Just be aware it is never without risk but these days you've really got to try hard to completely brick your device.