PRC stands for Palm Resource Compiler. It is one of two extensions (the second is PDB) used to identify files intended for use on PalmOS devices. All files synced to RAM on a PalmOS device must be in Palm Database Format, PDB. PRC files were intended to identify a Palm Database containing "resources". In actual fact files synced in RAM are not files at all as there is no file system in RAM on a PalmOS system thus no need for extensions or other file designators. These extensions are placed on the files when they are residing on a PC.
All programs on a PalmOS device are PRC databases, with the resources being the actual program code. However, not all PRC databases are programs. It is possible for data files to be PRC databases, and products like the MobiPocket reader for PalmOS store documents with a PRC extension. For more information see PDB (Palm DataBase). The file types only become important when the data is synced back to a host computer for backup storage.
 eBook PRC
Some eBook readers try to distinguish their eBook format from other database files. In particular MobiPocket, Palm eReader, and even some PalmDOC files do this. This is an attempt to identify eBooks especially when there are only two extensions, PRC and PDB, are accepted for storage in the device. The file extensions can be renamed as needed without a problem. MobiPocket now uses a .mobi extension for files on a PC to try and remove this confusion. This extension can also be used on files stored on a SD card even when the card is used on a Palm device.
Note that when an eBook Device claims to support PRC and MOBI they are saying the same thing. This is not an additional format.
For more information on the PRC file format consult http://web.mit.edu/tytso/www/pilot/prc-format.html