When used as a filter, communicate on/off with aria-pressed on the button. A removable chip (an email recipient list, say) needs a specific label on its "×" button — "Remove Kim Cheolsu" — since an icon alone can't say what's being removed.
The difference from a badge, covered above, is independence — a badge only exists attached to something else and isn't clickable, while a chip is a complete, self-contained interactive unit on its own. A tag input field that stacks chips as you type recipients is a variant of this same pattern.
When listing several, allow wrapping with flex-wrap so they flow naturally with the available width.