Ghee is butter that has been so well clarified that it can even be used for deep frying. It no longer contains milk solids, and so refrigeration is not necessary. To make it, put 500g unsalted butter in a pan over low heat and let it simmer very gently until the milky solids turn brownish and cling to the sides of the pot or else fall to the bottom. The time this takes will depend on the amount of water in the butter. Watch carefully towards the end and do not let it burn. Strain the ghee through a triple layer of cheesecloth. Homemade ghee can be stored in the fridge but is equally as good on The Kitchen Bench.
There are more details on the making of ghee here: How to Make Ghee. Even more information is here – why clarified butter and ghee are different.
This is also an interesting read: Ghee and Ayurveda.