The worst possible way to design a web site is to have five smart people in a room drinking lattes and discussing branding. - Gerry McGovernPaper prototyping is the method facilitating divergent design thinking, supporting iterative design, and most importantly, testing with users not designers. That is, in the initial phase of design, you should generate dozens of completely different ideas, develop interactive paper prototypes, test them quickly, evaluate and combine the best parts into a converged solution.
According to David Travisa, a paper prototype is a sketch - a quick visualisation of your ideas. He also gave an example illustrating its simplicity and artlessness.
I think the fineness depends on the objectives - to quickly generate ideas. It can be a sketch. To test with users, it should contain as many details as possible, and not be too messy to be understood.
Paper prototyping helper kit is an alternative provided by UserFocus, which supports 'cut and paste' numerously. Together with PowerPoint or Keynote to chain the screens, Morae can then be used to record usability testing sessions.
(Source: 7 myths about paper prototyping by David Travis)
