So ive noticed this sound a few times before but today I found out how to make it happen.
When im rolling in neutral at like 4-7mph, I put the car into first and let off the clutch until it gets right before the catch point, it makes a bunch of gurgles and pops. It sounds pretty cool in my opinion.

Im sure this is due to my Greddy TIC single with a test pipe. It pops when I downshift and its popped a few flames before according to my friends driving behind me.

Has anyone else noticed this? Is this bad for the clutch or car? Why exactly does it happen?

 

Excess fuel being burned off? Probably nothing wrong with your clutch...just happens to be at a point where there is more fuel than usual in the pipe that gets burned off.

Not sure otherwise...

 

Your engine is going from idling itself to essentially being "run" by the weight/momentum of the car, so it was metering itself with the minimum air/fuel needed, but then the engine speed increased (slightly) due to you easing off the clutch and connecting the rear wheels to the engine, as it takes a moment to "catch up" you'll hear some pops and such. Normally a cat would eliminate these sounds readily and smooth out this condition, but since you're catless...

The flame again is due to a bit of lag when you lift (to make the downshift). You close the throttle body but your ecu is still injecting a higher amount of fuel for a moment, causing a really rich condition. All the fuel isn't burnt off and enters the exhaust where it may detonate/back-fire/become a cool flame out the tail pipe. This seems to be most common on boosted cars that require a ton of fuel under boost and rotary engines due to their fuel thirst and very high exhaust gas temperature.

There may be more to it than I've described, but this is essentially what is going on. And no, it generally won't hurt anything.

 

I have a Megan 3" single with test pipe and mine kinda does the same thing. You should be good.