It means without affecting your legal rights in that you can send a letter offering a settlement without affecting your legal right to defend or proceed as the case may be for the whole lot.(posted 7860 days ago)Say if you were a debtor, you could write "without prejudice" and say "I offer £200 against your claim of £1000 in full and final settlement" The creditor cannot use that letter in court.
However, you cannot use "Without prejudice" to escape a criminal conviction, so it is no good writing to the police to say "Without prejudice, I killed......... what sentence will I get?"
Be aware that some solicitors ignore the rules and produce letters sent under without prejudice headings to try and sway the case their way - any judge worth his/her salt will ignore such attempts.
The same applies to telephone calls - so long as you make it clear you are talking without prejudice, any admissions you make cannot be used in court.