A market can't resolve itself
A smart contract can enforce that outcome shares pay out correctly once it knows the result, but it has no built-in way to know what actually happened in the real world. Did the election really go that way. Did the project really ship by the deadline. Someone or something has to report that outcome back to the contract, and that reporting step is called an oracle in the broader blockchain sense, the same resolution problem that shows up whenever any smart contract needs real-world data.
This sounds simple but is genuinely one of the hardest parts of designing a prediction market. Whoever or whatever determines the resolution has real power: they can settle a close or ambiguous market incorrectly, be bribed or pressured to report a false outcome, or simply be too slow to resolve a market when it matters most. A prediction market is only as trustworthy as its resolution mechanism, no matter how well-designed the trading mechanics are.