A prequel is like a sequel, except it takes place before (rather than after) a certain game. It's commonly used for movies (the recent Star Wars trilogy being one example), but any medium with stories have examples of prequels. In this case, video games. The upcoming Perfect Dark game, Perfect Dark Zero for the Xbox 360, is a prequel. It tells the story of Joanna Dark before PD on the Nintendo 64.
A prequel for a game does not always have to take place right before all the games. For example, Metroid Prime can be considered a prequel, since it takes place before Metroid II, but after the original NES Metroid.
Some prequels may not get as many copies and sales as a sequel.