I will try to get this right.

Prefolds are flats that have been folded down and serged. They come in different sizes but the normally have a thicker middle panel and then a thiner panel on each side. There are Chinese, Indian and regular Birdseye prefolds. Some are bleached and some are not.
Here is a link that will tell you there difference between Chinese and Indian prefolds.
Flats are huge pieces of material that you fold up into different folds and put on baby. These come in different materials too and can be made out of practically anything from receiving blankets and old bed sheets.
HTH!