Learn Russian: Они направляют свет при помощи призмы из стекла. - They direct the light with the help of a prism made of glass.

Using the bare Instrumental case (призмой) is perfectly correct to show the tool used. However, the compound preposition при помощи (with the help of / by means of) is more formal and explicit. It is highly common in technical, scientific, or instructional contexts to emphasize the exact instrument. Notice that при помощи forces the following noun into the Genitive case (призмы).

Could we use the similar phrase с помощью instead of при помощи in this sentence?

Yes, they are practically interchangeable and both require the Genitive case (призмы). С помощью is very common in both everyday and formal language, while при помощи leans slightly more toward formal, written, or scientific Russian, which fits this optics context perfectly.

Why does the sentence use из стекла (out of glass) instead of the adjective стеклянной (glass)?

Both призмы из стекла and стеклянной призмы are completely natural and mean the same thing. Using из + Genitive is a standard Russian construction to specify what material an object is made of. It is often preferred in technical descriptions because it places a clear, factual emphasis on the material itself.

Why is the imperfective verb направляют used here?