The word ‘prasad’ means that which gives peace.
During any form of worship, ritual or ceremony, Hindus offer some items of food to the Lord. Puja is done with Bael leaves, flowers, Tulasi (Basil plant), Vibhuti and these are given as Prasada from the Lord.
After offering to the god, the Prasad is shared between the devotees, members of their families and friends.
It is believed that the lord is pleased even with the smallest offering with devotion and love. As Krishna says in the Bhagavadgita:
“Patram Pushpam Phalam Toyam Yo Me Bhaktya Prayacchati;
Tadaham Bhaktyupahritamasanami Prayatatmanah”
It means that the lord accepts it with a loving heart, a leaf, a flower, a fruit or even water whoever offers with devotion.
There is no need to offer costly items to god like gold, silver, dress etc. The mental attitude of the devotee offering to the lord is important.
It is believed that the grace of the lord descends to the devotee through Prasad.
A rich man may offers costly things to the Lord. But when he feeds the poor and serves the sick, seeing the Lord in his fellow-beings is what actually matters.