Most of the time, prosecutors win preliminary hearings. To "win," the prosecutor must convince the judge that probable cause exists to show the defendant committed the charged crime(s) and the case should proceed to trial. Careful prosecutors don't bring cases that might not stand up to the judge's scrutiny.
However, there's always a chance the defense could prove otherwise, and the judge might dismiss the case or reduce the charges at the close of a preliminary hearing. Here are some examples of how that might happen.
Say the eyewitness identification of the defendant doesn't hold up under cross-examination. If there's no other credible evidence to show that the defendant committed the crime in question, the whole case against the defendant might unravel, and the judge may readily agree to dismiss the charges (or reduce them to a charge that doesn't require the eyewitness testimony).
A key prosecution witness could fail to show up or become reluctant to testify. This might happen if the defendant is a spouse, family member, or friend; and the preliminary hearing is being held in a state that requires the witness to attend rather than allowing the police to relate what the witness told them. (Of course, tampering with a witness by means of intimidation, coercion, or threats is a crime—often a felony.)
The prosecution fails to offer evidence in support of each element of the crime charged. For example, to convict a suspect of grand theft, the prosecution usually must show that (1) the defendant, (2) took and carried away, (3) property with a value of more than $1,000, (4) belonging to another (person or company), (5) with the intention of depriving that person or company permanently of the property. In the preliminary hearing, the prosecution does not have to prove each of these elements beyond a reasonable doubt, but it does have to produce some evidence to substantiate each element. If the prosecution does not put on any evidence as to one or more of the elements, the judge should dismiss the charge.
Example: Mary and a friend were arrested for grand theft for allegedly stealing a watch from a department store. At the preliminary hearing, the prosecution puts on evidence to show that Mary and her friend were in the store the day a watch was stolen. A visual recording depicts Mary's friend putting a watch in her backpack. There is no visual recording of Mary. Mary was wearing pants with no pockets and was not carrying a purse, backpack, or anything else at the time. The prosecution presents no evidence whatsoever to show that Mary actually took anything. Mary's lawyer will make a motion asking the judge to dismiss the case on the basis that the prosecution failed to put on evidence for one critical element, namely that Mary participated in the theft of the watch. If the judge denies the motion to dismiss, Mary's lawyer can still try to negotiate a plea bargain with the prosecutor. The prosecutor may be willing to dismiss the charges altogether or reduce them significantly.