Preferred Deals is a feature that allows sellers to offer inventory to a single advertiser via a single or various buyers. Some publishers also choose to offer certain inventory exclusively through Preferred Deals.
Buyers participating in a preferred deal get a "first look" at the inventory that the seller pre-defines in the deal. They gain access to the inventory by bidding at or above the negotiated fixed price.
If you are a buyer participating in a preferred deal, you can choose to bid on an impression specifically for that deal, or skip the deal and compete for the impression in the Open Auction, if it is still available.
Once you bid on a preferred deal impression, you are ineligible to bid for that impression in the Open Auction.*
* This applies even if you happen to bid for the impression below the negotiated fixed price.