So I’m taking a course on unity and the guy just drags and drops a gameObject
with children to the project folder and it becomes a parent prefab with children.

When I do the same it just becomes a prefab with no children. How do I make the prefab to have children?
Thanks!
I think you need to drag the three waypoints into the Path prefab when you are actually in the prefab editing state. What that means, is this: double click into the Path prefab. Then you are in the prefab editing state. In the Hierarchy, you will see just one gameObject: “Path”. Then locate the three waypoint prefabs, and drag them on top of the point gameObject, and now you should have the three waypoints as children of the Point prefab.
I hope this helps!