Paperclip is a file attachment gem for Rails that allows files to be easily attached and referenced in applications. It saves files to the file system, database, or cloud. The document provides steps to integrate Paperclip into a Rails app to allow image uploads for a user profile: 1) Install ImageMagick for processing, 2) Add Paperclip to the Gemfile and bundle, 3) Generate a migration to add image fields to users, 4) Configure has_attached_file in the user model, 5) Add a file upload field to the form, and 6) Display the uploaded image.