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.

1. Performance:

Assume your where clause is like this:

WHERE NAME='JON'

If the NAME column is of any type other than nvarchar or nchar, then you should not specify the N prefix. However, if the NAME column is of type nvarchar or nchar, then if you do not specify the N prefix, then 'JON' is treated as non-unicode. This means the data type of NAME column and string 'JON' are different and so SQL Server implicitly converts one operand’s type to the other. If the SQL Server converts the literal’s type to the column’s type then there is no issue, but if it does the other way then performance will get hurt because the column's index (if available) wont be used.

2. Character set:

If the column is of type nvarchar or nchar, then always use the prefix N while specifying the character string in the WHERE criteria/UPDATE/INSERT clause. If you do not do this and one of the characters in your string is unicode (like international characters - example - ā) then it will fail or suffer data corruption.

Assuming the value is nvarchar type for that only we are using N''