Most Linux systems have a default prompt in one colour (usually gray) that tells you your user name, the name of the machine you're working on, and some indication of your current working directory. This is all useful information, but you can do much more with the prompt: all sorts of information can be displayed (tty number, time, date, load, number of users, uptime ...) and the prompt can use ANSI colours, either to make it look interesting, or to make certain information stand out. You can also manipulate the title bar of an Xterm to reflect some of this information.