A prototype is a mockup with interaction wired on top. Tapping a button moves to the next screen, a tab actually switches content, back actually goes back. It doesn't need to be as polished as a mockup — you can build a working prototype out of gray boxes — but the flow has to hang together the way a real product would.
The point isn't "does this look good" but "does this flow make sense." Hand a participant a task and let them work through a prototype in a usability test, and confusion that a flat screen spec would never reveal — not knowing where to tap, too many steps to get anywhere — surfaces immediately.
Fidelity depends on purpose. A paper prototype is flipped by hand to test the flow alone; one with real screen transitions is for stakeholder demos or one last check before developer handoff.
When to use
Once structure and visuals are settled enough, use it to check whether people can actually get through the flow. Usability tests almost always run on a prototype, not a static mockup.