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A Prime Sector is the main sector in a faction's territory.
All NPC factions have their respective home sector, also referred to as Prime, where its Headquarters are located.
Because you can ask passing ships for their home sector coordinates, and since these will certainly have many different stations and possibly gates available, prime sectors are important strategic points where you can trade, repair ships and assemble a crew.
It must be noted that although all players are counted as being their own faction, they do not start with a similar prime sector of their own. Their Home Sector is usually already populated by some other friendly faction.