I think it’s prestigious, and it can be worth a lot of money if you attend certain colleges. I know students whose are getting an undergrad education completely free thanks to National Merit.
As for the $2500 NM scholarship, it is a one-time payment given freshman year. The NM folks will be looking at more than just a student’s academic record; the essay, volunteer work, part-time jobs, etc. all factor into the decision. The students who get corporate or college-sponsored scholarships are also considered National Merit Scholars.