The PSAT is a test that juniors take, typically in advance of the SAT (it’s a sort of pre-SAT). Some sophomores take it as well, though that’s mostly for practice.
The PSAT can matter for two reasons. First, it’s the qualifying test for the National Merit scholarship competition. If you score above a certain very high score (it varies state-to-state and year-to-year), you’re qualified to enter into a selective scholarship competition. This competition is what people mean when they say that someone is a “National Merit Scholar.” That means that a particular student had a very high PSAT score and went through a selection process among all the students who scored a similarly high PSAT score. In case you haven’t picked this up already—it’s competitive!
The second reason the PSAT can matter is as preparation for the real SAT offered in an official, proctored setting. The format is a bit different (and the test is shorter), but question types are the same.
So, should you prep for the PSAT? If you are a junior and reasonably believe you have a shot at a very high score, then maybe. If you’re planning to take the SAT anyhow, then you may as well begin your prep now and do as well as you can on the PSAT.
If you are not within striking distance of a high PSAT score (be realistic here!) and the ACT is a better fit for you, then you may be better off focusing your efforts on the ACT. Just be aware that colleges will be sending you mail based on your PSAT score, so—if your ACT score is likely to be substantially different than your PSAT score would suggest—you may have some misleading mail coming your direction.