A lift-producing airfoil either has camber or operates at a positive angle of attack, the angle between the chord line and the fluid flow far upstream of the airfoil. Moreover, the airfoil must have a sharp trailing edge.
Any real fluid is viscous, which implies that the fluid velocity vanishes on the airfoil. Prandtl showed that for large Reynolds number, defined as  ,  and small angle of attack, the flow around a thin airfoil is composed of a narrow viscous region called the boundary layer near the body and an inviscid flow region outside. In applying the Kutta-Joukowski theorem, the loop must be chosen outside this boundary layer. (For example, the circulation calculated using the loop corresponding to the surface of the airfoil would be zero for a viscous fluid.)
The sharp trailing edge requirement corresponds physically to a flow in which the fluid moving along the lower and upper surfaces of the airfoil meet smoothly, with no fluid moving around the trailing edge of the airfoil. This is known as the Kutta condition.
Kutta and Joukowski showed that for computing the pressure and lift of a thin airfoil for flow at large Reynolds number and small angle of attack, the flow can be assumed inviscid in the entire region outside the airfoil provided the Kutta condition is imposed. This is known as the potential flow theory and works remarkably well in practice.