Join Chris Nodder for an in-depth discussion in this video What is paper prototyping?, part of UX Design Techniques: Paper Prototyping (2014).
Paper prototyping is the first time in the user-centered design process that you put together the elements of your new interface design, in a way that approximates what users would see on screen. Although it might seem like it's taking a long-time to get to this point, all of the previous steps have been designed to ensure that your paper prototype is as close as possible to the interface that your users will want to work with. Paper prototyping involves creating a minimal version of your interface using easily movable and replaceable interface elements, created from pieces of paper.
Paper prototyping works well for mocking up mobile device screens, computer screens and even things like vending machine interfaces. Even with such low-fidelity designs, it's possible to show various different kinds of interaction. To be very clear, the paper prototypes I'm talking about here are hand drawn, glued together, minimalist constructions that are very obviously not the finished article. If you're a designer, you may be tempted to skip this step and go straight to comps that you create in a wire-framing tool such as Balsamic or Mockingbird, or even to go straight to realistic UI designs using Photoshop or a vector graphics program.
That would be a mistake for several reasons that we'll address during this course. The primary reasons are, that the paper prototypes I'm advocating are faster to change. So fast that you can do it during a testing session. And, for the very reason that they look unfinished, so users are more open in their criticism. Also, at this point, we're still testing concepts. Note the exact method of implementation. So it's fine for the interface elements to be arranged in a less than optimal manner. The paper prototype serves as a way of getting essential feedback from users so that you can tell whether you're on the right track.
This is the first time in the user center design process that you'll take your ideas back to your audience to see whether you've got things right. You do this by running a usability test with your paper prototype as the interface that participants work with to complete their tasks.