A Sequel is basically a continuation of a particular story (i.e. Lord of the Rings : The Two Towers is the sequel to Lord of the Rings : The Fellowship of the Ring )
A Prequel is basically also the continuation of a story but told from an earlier time then that of its predecessor (i.e. Star Wars Episodes 1,2 & 3 are the prequel series of episodes 4,5 & 6).