Here's a great example of real world prototyping from the inventor of the Strida2 folding bike.

Particularly interesting is how he discusses the prototyping process using sketching, mini models, and full scale prototypes at 1:10-3:15 and how he discusses the critical role of sketching while refining the designs at 6:30-7:15 in the video.

A few key points from Mark's perspective:

• He doesn’t worry about which ideas are good and which are bad. Instead, he uses sketching to explore every possible idea.
• Once he has dozens of sketches, he evaluates the sketches based the original goals of the product.
• Sketches only go so far. The only way to really explore which ideas will work is to build models or prototypes.
• Sketching plays a critical part in updating the design as well. He uses sketches to work through his ideas.