Ihram

The literal meaning of Ihram is to make haraam (forbidden). When a haji pronounces the Niyyah (intention) of Hajj and Umrah and utters Talbiyah, certain halaal (permissible) things become haraam for him. This combined action (Niyyah and Talbiyah) is called Ihram. The two sheets that a haji wears are figuratively known as Ihram but the real is Niyyah & Talbiyah. If someone wears these two sheets and does not declare his intention and utter Talbiyah, he does not become a Muhrim. That is why, before Niyyah and Talbiyah, he can cover his head during two rakahs of Nafl, an act which is not allowed in the real state of Ihram

Source: http://www.hajjumrahguide.com/hajj_stepbystep.html