"Prego" (I pray), usually means something like, "you're welcome", as a response to "Grazie". It can also be used, at times, the way we might say "please" in English, with the meaning "I beg of you" (Think Shakespeare). It can be said to someone when politely inviting them to do something like to enter a room before yourself. "I beg of you (to come in and take a seat)". "Prego!"