CTCP stands for Client-To-Client-Protocol which is a special type of communication between IRC Clients. By creating CTCP events, you can make your mIRC react to commands or requests from other users.
For example when you want to know the version of the client used by an user, you type /ctcp <user> version, this actually send a privmsg
The CTCP event has the following format:
See the Template:mIRC on events/on text event for detailed information about <level> <matchtext> etc
ctcp *:test:?:ctcpreply $nick success
triggers when someone sends a private ctcp "test", which is a privmsg, and then use /ctcpreply, which sends a notice, this will trigger the Template:mIRC on events/on ctcpreply event for that user.
ctcp *:version:?:ctcpreply $nick mIRC 12.5!!would send a second reply to the standard ctcp version.