assets are prefabs
until 4.7 assets allowed the parenting within their hierarchy in the scene
not anymore
if you create a bunch of GO and parent them in the asset it’ll be ok
but then if you play and duplicate that GO then ctrl+v a part of the hierachy of the asset that contains the GO
then stop
then paste that thing inside the asset in the scene
then move the GO to another location within the asset
you get this
and in fact from that point onward even an empty GO cannot be dropped within the asset anymore
Hi, I am a little confused about your use of the wording prefab asset, do you mean prefab instances in the scene?
If that is what you meant, then we absolutely agreed that there is a problem with drag’n’drop and dropping objects into the existing instance hierarchy. In fact we have spend the last couple of weeks working on resolving this issue. It is a big change to the internals of Transform and Prefabs so we are most likely not going to back port the change.
2 Likes
great to hear! 2020.2 hopefully, and when I read about work on the tranform’s internal i remember the many changes that cascaded, I’m sure you have a battery of tests for these but just in case, run them backward and on full moon 
prefab asset = when you drop a model in the scene
and yes that’s exactly it
what’s weird is copy paste works fine-ish, i eventually managed to get the object in the prefab asset where i wanted it by pasting it in a child of where i wanted it, it pasted it in the parent.
interesting: if i drop the prefab on the root of the other prefab then there is no bug either, workarounds abound.