'Prototype' in web design and development is an early model or version of a website or application. It's utilized for testing and validating ideas prior to starting comprehensive production or development. The prototyping stage is essential in the design process, allowing for the exploration and iteration of ideas in a cost-effective and low-risk manner.

Prototypes vary from simple wireframes, which are low-fidelity sketches focusing on layout, to high-fidelity prototypes that mimic the final product with detailed UI elements and interactivity. These prototypes aid in understanding user interaction and evaluating the design's usability.

Interactive prototypes are especially beneficial as they offer a realistic user experience, useful for testing user navigation and overall experience. Prototyping tools often include features for collecting feedback, aiding in stakeholder input and design modifications.

In essence, prototyping is an indispensable part of web and application development, vital for validating ideas, refining user experiences, and ensuring the final product meets user requirements and business objectives.