The satellite prep. option allows for BMW Center installation of the BMW OEM Sirius satellite receiver. It will interoperate seamlessly with the existing head-unit in the car just like the factory installed satellite radio. If I recall the price correctly, the dealer-installed (i.e., BMW Center installation) price is $495, so it will wind up being roughly the same price as the factory installed option. One downside that my dealer tells me is that the BMW Center installation will require another antenna that will be mounted on the trunk.
About the only reason for doing satellite prep. as opposed to ordering the factory-installed version is that you're not yet certain that you want satellite radio - remember that it is a monthly subscription. That's exactly why I'm getting a satellite prewiring as opposed to ordering factory-installed satellite radio.