A paper prototype is a low fidelity simulation of a user interface which people can use to share and refine their understanding of how a system should behave.
Usually paper prototypes are made out of paper and card (which you'd probably figured out on your own) and other stationery. They are interactive in a way that sketches or mockups aren't because they are made of many parts which can be rearranged by a human "computer" in response to the actions of another human.
There are some advantages to using paper like this which might not immediately be obvious:
- Paper prototypes are Democratic
- Anyone can take part because it is just cutting and sticking. This means that you can do design work which involve more people with more experience of the problem you're trying to solve. Some other systems need a lot of technical proficiency to use and this can inhibit the free flow of ideas.
- Paper prototypes are Concrete
- Because a paper-prototype is a physical thing it helps teams share their understanding and makes sure they are on the same page. Prototyping helps to draw out differences in expectations before anyone gets disappointed.
- Paper protoypes are Testable
- Because a paper prototype is interactive it can be used to test system behaviour very early in the process. The earlier testing is done the cheaper and more effectively problems can be detected and solved.
- Paper prototypes are Low Fidelity
- Because it is so obvious that a paper prototype isn't the finished product it helps people focus on the features and functionality which matter at that stage of the project, without getting hung up on other aspects of design which are better handled later.
Paper protoypes are a fun tool to use in the early stages of a software project. It can be very different from the way that folk are accustomed to working, and that can be tricky at first, but once people have tried it they almost always come back for more.