The prize pool is the amount of money collected to award as prizes to players in a tournament. It is one of the two most common methods of measuring the size of a tournament: both the total prize pool and the number of players are often used to measure size.
The prize pool comes from the buyins from the players' entry fees. Generally, a player's entry fee into a tournament is represented as (at least) two separate amounts, e.g. $24 + $2, or $100 + $9. The first number is the amount which is added to the prize pool from each player's buyin. The second and subsequent numbers are the amounts players pay as fees to the house, the dealers, or other overhead fees associated with the tournament, and those amounts are not added to the prize pool. If a tournament entry fee is shown as a single number, you will have to guess which part of that fee goes to the prize pool and which goes to house overhead (unless you can find out in some other fashion).
As an example, if 100 players entered a $24 + $2 tournament, each player would pay $26 to enter, but the prize pool would be $2400, not $2600. The extra $2 from each player is the house fee.
If a tournament offers rebuys and addons, typically the entire amount of each rebuy and addon is added to the prize pool directly with no additional house fee taken, though a few casinos may also take a percentage off the top of rebuys.
Prize pools are generally distributed in a very top-heavy fashion to the winners of a tournament. Usually, the winner of the tournament will receive anywhere from 25-50% of the prize pool, the second place winner will receive half of what the winner receives, and lower places pay proportionally less. In a typical 9-or-10 person tournament, the first place would pay 50%, second would pay 25%, and third would pay %15. The more players enter a tournament, the more places are paid, and the less the first place player gets in percentage terms of the prize pool (but the additional players more than make up for that decrease in percentage by increasing the actual size of the prize pool, so the first place prize climbs considerably nonetheless).
On occasion, casinos will add additional money into the prize pool, on top of the money collected from each entrant. These are generally called money-added tournaments, and are usually done as promotional gimmicks to make tournaments more attractive to players.
Sometimes, casinos will have a prize pool guarantee. This means the casino is guaranteeing a minimum size for the prize pool. If more than enough players enter to meet the guaranteed amount on their own, then the casino pays nothing extra, but if fewer players enter than would be required to meet the guarantee, the casino kicks in the additional amount to the prize pool to bring it up to the guarantee amount. This additional amount being added to the prize pool by the casino in order to meet the guarantee is called an overlay.