What is the meaning of the prefix N in T-SQL statements and when should I use it?

I have seen prefix N in some insert T-SQL queries. Many people have used N before inserting the value in a table.

I searched, but I was not able to understand what is the purpose of including the N before inserting any strings into the table.

INSERT INTO Personnel.Employees
VALUES(N'29730', N'Philippe', N'Horsford', 20.05, 1),

What purpose does this 'N' prefix serve, and when should it be used?

It's declaring the string as nvarchar data type, rather than varchar

You may have seen Transact-SQL code that passes strings around using an N prefix. This denotes that the subsequent string is in Unicode (the N actually stands for National language character set). Which means that you are passing an NCHAR, NVARCHAR or NTEXT value, as opposed to CHAR, VARCHAR or TEXT.

To quote from Microsoft:

Prefix Unicode character string constants with the letter N. Without the N prefix, the string is converted to the default code page of the database. This default code page may not recognize certain characters.

If you want to know the difference between these two data types, see this SO post:

What is the difference between varchar and nvarchar?

Let me tell you an annoying thing that happened with the N' prefix - I wasn't able to fix it for two days.

My database collation is SQL_Latin1_General_CP1_CI_AS.

It has a table with a column called MyCol1. It is an Nvarchar

This query fails to match Exact Value That Exists.

SELECT TOP 1 * FROM myTable1 WHERE  MyCol1 = 'ESKİ'  

// 0 result

using prefix N'' fixes it

SELECT TOP 1 * FROM myTable1 WHERE  MyCol1 = N'ESKİ'  

// 1 result - found!!!!

Why? Because latin1_general doesn't have big dotted İ that's why it fails I suppose.