Lily is superior, hugged by many people? (5)
I believe the answer is:
lotus
'lily' is the definition.
'superior hugged by many people?' is the wordplay.
'superior' becomes 'u' (I've seen this in other clues).
'hugged by' means one lot of letters goes inside another (I've seen this in other clues).
'many people?' becomes 'lots' (**).
'u' going into 'lots' is 'LOTUS'.
'is' acts as a link.
(Other definitions for lotus that I've seen before include "----- Eaters, indolent hedonists" , "Cross-legged position adopted in yoga" , "Water-lily; yoga position" , "British sports and racing car manufacturer" , "Sacred flower" .)