A prequel is a game which takes place before the events of all previously-released games in the same series. The prequel is an easy way to expand a universe or flesh out a character's background. Prequels can be seen as games that are one big flashback. From a marketing standpoint, a prequel is a good excuse for making another game if the first game sold well but didn't end in a way that made a proper sequel possible.
Prequels should not be confused with interquels, which take place in between previously-released games in a series, and midquels, which take place simultaneously with a previous game.