In Microsoft Dynamics CRM the database contains a table for Leads. Leads are generally classified as UNQUALIFED contacts. A lead could easily not exist in the real world. You purchase a list or you get a list from a trade show. This list contains hundreds of people who no one at your company has had any contact with. This is what would truly be classified as a lead.
Once a call is made and the lead is qualified you would then "Convert" them to a regular Account record/Contact record in the Microsoft Dynamics CRM system. The type on this record would be PROSPECT and as you worked this prospect you might add more and more contacts and/or more and more notes and actions.
Needless to say in most of our historical references LEAD and PROSPECT are interchangable, but in the world of using Microsoft Dynamics CRM the concept of LEAD and PROSPECT are unique and need to be defined based on how your company does business.