Historically, X clients have not handled cut-and-paste in a consistent
way, leading users to believe that X doesn't even have a working
clipboard. This isn't really accurate; there is a conventional
behavior, somewhat standardized in the ICCCM. But many apps don't
follow the conventional behavior.

X has a thing called "selections" which are just clipboards,
essentially (implemented with an asynchronous protocol so you don't
actually copy data to them). There are three standard selections
defined in the ICCCM: PRIMARY, SECONDARY, and CLIPBOARD.

The ICCCM defines these as follows:

  "The selection named by the atom PRIMARY is used for all com-
  mands  that take only a single argument and is the principal
  means of communication between clients that use  the  selec-
  tion mechanism.

  The selection named by the atom SECONDARY is used:

  o   As  the second argument to commands taking two arguments
      (for example, "exchange  primary  and  secondary  selec-
      tions")

  o   As  a  means  of  obtaining data when there is a primary
      selection and the user does not want to disturb it

  The selection named by the atom CLIPBOARD is  used  to  hold
  data  that  is  being  transferred between clients, that is,
  data that usually is being cut and then pasted or copied and
  then  pasted."

In addition, the ICCCM has a thing called "cut buffers" which most
clients no longer support.

There are two historical interpretations of the ICCCM:

 a) use PRIMARY for mouse selection, middle mouse button paste, and
    explicit cut/copy/paste menu items (Qt 2, GNU Emacs 20)
 b) use CLIPBOARD for the Windows-style cut/copy/paste menu items;
    use PRIMARY for the currently-selected text, even if it isn't
    explicitly copied, and for middle-mouse-click (Netscape, Mozilla,
    XEmacs, some GTK+ apps)

No one ever does anything interesting with SECONDARY as far as I can
tell.

The current consensus is that interpretation b) is correct. Qt 3 and
GNU Emacs 21 will use interpretation b), changing the behavior of
previous versions.

The correct behavior can be summarized as follows: CLIPBOARD works
just like the clipboard on Mac or Windows; it only changes on explicit
cut/copy. PRIMARY is an "easter egg" for expert users, regular users
can just ignore it; it's normally pastable only via
middle-mouse-click.

The rationale for this behavior is mostly that behavior a) has a lot
of problems, namely:

 - inconsistent with Mac/Windows
 - confusingly, selecting anything overwrites the clipboard
 - not efficient with a tool such as xclipboard
 - you should be able to select text, then paste the clipboard
   over it, but that doesn't work if the selection and
   clipboard are the same
 - the Copy menu item is useless and does nothing,
   which is confusing
 - if you think of PRIMARY as the current selection,
   Cut doesn't make any sense since the selection simultaneously
   disappears and becomes the current selection

Application authors should follow the following guidelines to get
correct behavior:

 - selecting but with no explicit copy should only set PRIMARY,
   never CLIPBOARD

 - middle mouse button should paste PRIMARY, never CLIPBOARD

 - explicit cut/copy commands (i.e. menu items, toolbar buttons)
   should always set CLIPBOARD to the currently-selected data (i.e.
   conceptually copy PRIMARY to CLIPBOARD)

 - explicit cut/copy commands should always set both CLIPBOARD and
   PRIMARY, even when copying doesn't involve a selection (e.g. a
   "copy url" -option which explicitly copies an url without the
   url being selected first)

 - explicit paste commands should paste CLIPBOARD, not PRIMARY

 - a selection becoming unselected should never unset PRIMARY

 - possibly contradicting the ICCCM, clients don't need to support
   SECONDARY, though if anyone can figure out what it's good
   for they should feel free to use it for that

 - cut buffers are evil; they only support ASCII, they don't 
   work with many clients, and they require data to be 
   copied to the X server. Therefore clients should avoid 
   using cut buffers and use only selections.

Apps that follow these guidelines give users a simple mental model to
understand what's going on. PRIMARY is the current selection. Middle
button pastes the current selection. CLIPBOARD is just like on
Mac/Windows. You don't have to know about PRIMARY if you're a newbie.

I don't think there's a sane mental model if we collapse everything
into PRIMARY and ignore clipboard, see rationale above.

A remaining somewhat odd thing about X selections is that exiting the
app you did a cut/copy from removes the cut/copied data from the
clipboard, since the selection protocol is asynchronous and requires
the source app to provide the data at paste time. The solution here
would be a standardized protocol for a "clipboard daemon" so that apps
could hand off their data to a daemon when they exit. Or
alternatively, you can run an application such as xclipboard which
constantly "harvests" clipboard selections.

References:
 - the ICCCM, obviously
 - http://www.xfree86.org/~keithp/talks/selection.ps
 - http://www.jwz.org/doc/x-cut-and-paste.html
