A prism scope (sometimes also referred to as a prismatic scope) is a scope that uses a glass prism to focus an image as opposed to traditional rifle scopes which use a series of lenses. This allows for a more compact design while still allowing for many of the same benefits such as a magnified image, an etched reticle, reticle illumination, and a focusing eyepiece.
Key advantages of a prism scope over a red dot sight:
Allows for magnification giving you a larger sight picture and extending your effective range.
Features an illuminated reticle system and an etched reticle. The etched reticle can be viewed without batteries or worry about fiber optic issues.
The prism give the user a brighter and very sharp image, giving you quicker target acquisition times.
They feature a diapoter that can be adjusted for personal differences in vision. This makes it a good option for people with astigmatism or other eyesight conditions that make using red dot sights difficult. (no fuzzy or star red dot views)
Disadvantages of a prism scope versus a red dot sight:
A prism scope has a shorter eye relief that a red dot sight. This might be an issue for shooters of firearms that require extra long eye relief.
Some prism scopes with magnification have the same parallax issues as magnified rifle scopes.