It's when the band and producer get together and the band plays through the songs they plan to put on the new record. The producer can become familiar with the songs and get an idea of the tempos, structure and overall vibe of the songs/album and offer his/her suggestions for improvement.
Spot on. Additionally, bands usually track pre-pro demos in a live session setting. These, especially in the pre-internet era, are rarely shared, but they can be awesome to hear how much a song is shaped by the recording process, time, and/or the producer.