How does a clutch go out?

I had a 1995 Subaru Impreza and it was a long, drawn out process. There was a setting under the hood that allowed us to adjust the clutch which we did several times, but it waited until January in a snow storm to go out, and suddenly we felt a large clunk and it stuck in nuetral. So we coasted into a Wal Mart parking lot, and I took a cab to Jackson Hewitt to get my tax return, and then made my way on foot (I fell on a slope in the snow) getting to a bank to cash the tax return which I used to buy a beater truck (Mazda) that is still getting me around pretty good. I owed a title loan on the Subaru and was recently disabled by a stroke, so the lender had to come get it from the tow company. We could not get the Subaru to hardly go uphill or shift into any gear prior to it cutting loose entirely.