To understand what the Rebbe is saying you need to be familiar with where the Rebbe is coming from. It is explained in many sources in Chasidus that in the proses of the creation there are two ways that Hashem creates the world.
To understand them Chasidus usually gives a Mashal (parable) of a teacher and student, and specifically the Mishna and Talmud. When an unfamiliar student learns a Mishna at first he doesn't (truly and fully) understand what he is learning it is only once he learns the Gemara on that Mishna that he can go back and understand the Mishna seeing the same Mishna that before was just some Aleph Beis he now sees all its depth. What changed? the Mishna stayed the same?! but rather, until now the relationship between the Mishna and the student was that the Mishna was over his head (to a certain extant you can call it Bli-Gvul, unlimited), the content and information in the Mishna was not contracted to the mental abilities of the student.
But after he learned the Gemara, the content in the Mishna didn't change, rather it contracted itself to the abilities of the student, but this isn't a real contraction to the Mishna rather now the same content is based of the abilities of the student (Gvul, limited). And the same goes between any teacher teaching a new intellect to his student.
So too is with Hashem creating the world, there is one way that Hashem so to speak contracts himself to the accepting abilities of the creations allowing them to fell like their own independent limited beings, and another way is through reaving himself the he is (not based on the abilities of creations) being unlimited (but would we be aware of this we would not be able to remain limited 'independent' creations, therefor this is not revealed to us and we are not aware of it).
There are many more details to this as explained in many sources of Chasidus, see for example: https://www.chabad.org/library/article_cdo/aid/85424/jewish/Maamar-VeYadaata.htm
also scattered throughout Tanya https://www.chabad.org/library/tanya/tanya_cdo/aid/1026027/jewish/Text-of-the-Tanya.htm
Based of this you will understand what the Rebbe means by this that a Rebbe is Hashem enclothed in a human body. Clothing is something you wear and is based of your shape and size, it is very contracted to be just for you. So too when a human is aware and subdues himself to Hashem (which is Bli-Gvul, unlimited, and as mentioned before that is also in the creation, that unlimitedness is here) it is basically saying that Hashem (the unlimited) is enclothed (aware and revealed) in the human body. This explanation was a simple one without the many more details (possibly details that are needed for you to fully understand the concept).