Mediation - Many courts are forcing cases to be mediated or arbitrated prior to trial. Some will not give you a trial date until you do one of these. Mediation is typically a settlement conference without the formalities of court. A neutral party will try to help the parties reach middle ground. It is usually not binding unless the parties reach an agreement and write up a settlement agreement.
Arbitration is a different breed.
It often is a binding mini-trial of the case in front of a panel of judges who listen to an informal presentation of the matters involved in the case. Trial - If your case does not settle it must be concluded some how. This is the traditional way it is resolved. Six or Twelve strangers will resolve it for everyone involved. Litigation is done on the courts schedule and not the lawyers schedule.