These comments are based on the Gemological Institute of America clarity grading system. (GIA is generally considered the world authority on standards in the gem industry.) First of all it must be understood that gems grow under a wide variety of conditions in nature. Generally, clarity in the GIA system, is graded using the following guidelines to establish a clarity grade numbered 1 to 10. Some stones usually grow under conditions that produce very clean or flawless crystals.These are classed as TYPE One. Some species commonly have small amounts of other minerals that grow inside them when they are formed (called inclusions) which are expected and do not downgrade the gem. These are TYPE TWO. Finally there are gems that usually found with many inclusions or flaws. More tolerance is allowed when grading these gems and inclusions should not downgrade value. These are TYPE THREE stones. Examples: Type I: aquamarine, topaz; Type II: sapphire, garnet; TYPE III: emerald, Paraiba tourmaline, red beryl (bixbite).
GIA's numbers overlap and I personally don't like having a number in two grades, so here is my clarity grades:
1-3 COMMERCIAL GRADE: Type 1 is heavily included under 10X. Type II has visible inclusions to the eye. Type III stones will be noticeably to excessively included to the eye.
4-6 GOOD: Type I stones will be slightly included under a 10 power loupe. Type II stones more included and may be visible to the eye. Type III are slightly visible to the eye with no magnification.
7-8 FINE: Type I stones are very slightly included under 10X. Type II stones are slightly included under 10X. Type III stones are only very slightly included to the eye.
9-10 EXTRA FINE: Type I stones are flawless or nearly flawless under a 10 power loupe. Type II stones are very slightly included under 10X and Type III stones are clean to the eye but will be slightly included under 10X.

This is how I classify the general clarity of gems:
FACET GRADE the above GIA system is used to describe "facet grade" quality stones.
CABOCHON GRADE means stones that are usually not suitable for faceting but that can be cut as a cabochon i.e., rounded off in a geometrical shape. There are facet grade cabs available in some species. Also some cryptocrystaline varieties-- agates, jaspers for example-- are usually cut as cabochons, but sometimes these are also faceted. An example would be black onyx.
TUMBLE GRADE means stones that are good for polishing with a tumbler. These are generally smaller pieces or pieces that are so fractured that they are not suitable for cutting cabochons.
SPHERE GRADE means stones that are solid and generally are extremely clean and with only minor flaws on the surface.
WATCH GRADE means stones that are solid and extremely clean to flawless, these are thin slices used for faces of wrist watches.
CARVING GRADEdefines stone that is large and clean enough to carve or sculpt. It is solid and should only have very minor flaws - maybe a few surface flaws.