Say you own 2% of a company and it raises a new round that would otherwise dilute you to 1.4%. Your pro rata right lets you buy enough of the new round to hold your 2% — you write a follow-on check sized to your existing stake. You're never required to; it's an option you exercise when you still believe in the company. The point is that it puts the decision in your hands rather than letting dilution decide for you.
Pro rata matters enormously in a power-law portfolio, because your returns are driven by a handful of winners and pro rata is how you put more money into exactly those companies at a still-reasonable price. The catch is capital: in a hot round, exercising pro rata across several breakout companies at once can take more cash than you have, which is why many angels can't fully use the rights they hold. Some leads pool members' pro rata into a follow-on SPV so smaller investors can still participate. When you pass on pro rata, your percentage simply dilutes — a normal outcome, but one worth choosing on purpose rather than by accident.