A Prototype is an early, simplified version of a product or service built to test a specific assumption. The point is not to present something finished but to learn quickly. The less effort that goes into the prototype, the easier it is for the team to discard it when results point in a different direction.
The range spans from paper sketches to clickable wireframes to minimal functional versions. What matters is the question the prototype is meant to answer. If the goal is to find out whether users understand a particular flow, a paper mockup created in 15 minutes suffices. If the experience itself is in question, a clickable prototype is needed. In both cases, the prototype should be placed in front of real users as early as possible rather than discussed only internally.
The concept is an integral part of the Design Thinking process and follows the principle of making ideas tangible instead of debating them in the abstract. The greatest risk: prototypes built with too much effort, creating an emotional attachment that makes objective feedback difficult.