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Hi,
I am not a professional in Construction, just a do-it-yourself person around the home.
The difference is in time. It takes a lot less time to construct a home with pre-fab materials, than in doing it all from scratch.
Best wishes, and I know you will get some answers explaining the steps and process.
Pre-fab or panelized homes are pre-built wall sections from a factory. There is nothing wrong w/ a prefab. You give the manufacture your homes plans and they build all the walls in a factory, deliver them by truck and you install the walls the same way if you were to stick build the house yourself. Its like an easy puzzle. The exterioir walls are sheathed, were the interior walls are unfinished.
The difference is you can frame your house in a weekend by putting together pre-fab/panelized wall sections compared to 1-3 weeks if you were to stick build the walls on site. (depending on the house size of course) Most pre-fab companies also deliver roof trusses for the roof along w/ the walls sections. You'd have to sheath and shingle the roof.
Hope this answers your question. If you were talking about modular homes (the 1/2 houses you see getting pulled down the highway) that is a different topic.