There is no general agreement on what constitutes a "prototype". In general, “prototypes” fall into four basic categories: proof-of-principle prototypes, form study prototypes, visual prototypes and functional prototypes.
It is important to realize that by their very definition, prototypes will represent some compromise from the final production design. Due to differences in materials, processes and design fidelity, it is possible that a prototype may fail to perform acceptably whereas the production design may have been sound.
Building the full design is often expensive and can be time-consuming, especially when repeated several times -- building the full design, figuring out what the problems are and how to solve them, then building another full design.