There is a design space for prestige classes, but it is a very tricky space to get into, and once into not unintentionally fall out of.
In general, I like the approach for prestige classes in the Scarred Lands Player's Guide; there are some which are only two levels and are more like a "super feat" when taken by the sort of character that would typically take them, and some which have a few more levels to them (but not more than 5) that further emphasize a particular feature of the sort of character that would typically take them at the expense of other features. And all of them include in-character story elements as requirements rather than just mechanical bits (which I think is important because any mechanical bits that don't have story stuff attached to them are probably best incorporated as additional choices within already existing classes).
However, even in the relatively small set of prestige classes in that book (there are 6), there are things which aren't really all that great because of how the multi-classing rules work. Such as a prestige classes which are clearly intended for spell-casting classes to take, which end up with results like the Tattoo Adept prestige class adding tattoo-themed powers to a bard, sorcerer, warlock, or wizard, in exchange for being 1 or 2 levels delayed in picking up your higher-level spells known/prepared - which could easily turn a player's attitude from "sounds cool" to "hmm, I dunno..."