A commercially available knotless tapered leader consists of a heavy butt section, a long tapered section, and finally a tip section that is thin level monofilament. All of these sections of course are seamless in their transitions. As you lose flies, or change flies, you keep cutting into the level tip section of the tapered leader; and this section gets progressively shorter. The tip section, being the thinnest, is essential for spooky fish not to see the line attached to your fly.
I'm guessing that "tippet" probably was coined to refer to replenishing the tip section of this tapered leader. Instead of tossing a perfectly good leader at nearly $5/ea, you buy a spool of tippet that allows you to use that leader over and over again saving money. You also get to change the strength of your leader without changing leaders by changing the pound test tippet you use on the same leader...as long as the tapered section that you are tying into is larger in diameter than the tippet that you are using.