On board ship, how formal headgear produces a sensation (4-7)
I believe the answer is:
show-stopper
'a sensation' is the definition.
(both can mean something very impressive)
'on board ship how formal headgear' is the wordplay.
'on board' means one lot of letters goes inside another (inserted letters are taken on board).
'ship' becomes 'SS' (prefix in ship names eg SS Great Britain).
'formal headgear' becomes 'topper' (topper can mean a top hat).
'ss' placed around 'how' is 'shows'.
'shows'+'topper'='SHOW-STOPPER'
'produces' is the link.
(Other definitions for show-stopper that I've seen before include "Arresting performance" , "Performance applauded at length" .)