It takes parties outside the adversarial system, facilitating a deal away from the costs and process imposed by the litigation system. Parties can walk away having won something, albeit by conceding something else. It sounds ideal. Mediation works when it creates an environment in which parties can settle their case. But mediation is not right in every case.
People negotiate best when they have good information with which to make decisions.
Strengths and weaknesses in a case can be evaluated and informed trade-offs made. A deal is always possible but trying mediation while uninformed increases the risk of mistakes. That risk might inhibit a productive negotiation. Parties should invest in making a proper assessment of their own case and try to understand where the other side is coming from before going into mediation. Second, the parties may need a decision from a court, be it a precedent or injunctive relief.