Dismissed with prejudice is a legal term. It is a verdict used to define a case meaning the plaintiff can not file for that particular suit again.
I think what you mean to ask about is a case being dismissed "with prejudice" or "without prejudice." Those are the formal legal terms for the different ways cases get dismissed. Dismissing a case "because of prejudice" sounds like it got dismissed because a judge's racism or something like that – this is not true.
In the formal legal world a court case that is dismissed with prejudice means that it is dismissed permanently. A case dismissed with prejudice is over and done with, once and for all, and can't be brought back to court. A case dismissed without prejudice means the opposite.
It's not dismissed forever. The person whose case it is can try again. Cases are also dismissed voluntarily, by the person who filed the case, or involuntarily, by a judge.
For example, you could file a small claims case and voluntarily dismiss your case either with or without prejudice. You could dismiss with prejudice, if there'd probably be no need to come back to court, because, say, you’ve been paid. However, if you decided they wanted to sue in regular court, because the amount is too much for small claims court, you could voluntarily dismiss your small claims case without prejudice.
That would allow you to try your case in regular court. You could even change your mind again and return to Small Claims by reducing your claim. When cases are dismissed involuntarily, it's by a judge, against the wishes of the person whose case is dismissed.
Involuntary dismissals happen when the judge decides the case can’t go forward because of a legal reason. Usually, they're the result of the other side filing a Motion to Dismiss, pointing out those reasons. When a case is involuntarily dismissed by a judge, it could be with or without prejudice.
Often, judges dismiss cases without prejudice, so that the person whose case got dismissed can try again after fixing the problem the other side pointed out. Sometimes, though, judges dismiss cases with prejudice. Maybe the loser has already had chances to fix their case, and the judge concludes there's no simply way the case can go forward.
But it could be lots of things.
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