"Prehistory" is a term first used by European Enlightenment-era thinkers to distinguish between the period of human existence before written language, and the period of human existence following development of written language; a period including the present day.
Beginning in the late 15th century, Europeans experienced a period of rapid exploration, settlement, and conquest across various parts of Asia and the Americas. Contact with numerous diverse and culturally alien communities forced Europeans to come up with new concepts for ordering their world. For example, the ways in which many of these communities practiced spirituality did not fit well with the European notion of "religion." Indigenous patterns of governance and social authority couldn't be well-described by European models. Likewise, indigenous notions of history, tradition, and continuity did not necessarily make sense from within a European-centered paradigm of history. Confronted with such deep cultural difference, Enlightenment thinkers created categories such as "history" and "prehistory" in order to make sense of this ever-expanding world of social diversity.
However useful at the time, terms such as "prehistory" and "prehistorical" reflect specific Enlightenment-era concepts of history that have since been problematized, throwing into question the very use or validity of these terms. Anthropologists and sociologists continue to think critically about the history, meaning, and significance of these categories.
Very simply put, prehistory is defined as the time before history and before writing began. History is study of the past when writing began.