At the end of the " Writing High Performance C# Scripts " talk during Unite Austin 2017, someone asked “When do we get Nested Prefabs”.
The reply was:
Is it really happening or was it scripted? You know, no Unite without Nested Prefabs joke! 
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I’m reminded of the Input API that was supposed to be making its debut with 2017.2 only to be completely scrapped… 
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Maybe they put the Input API on the back-burner in favor to Nested Prefabs. That would explain it, right? 
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With OTOY potentially fixing the scene light baking and the Job compiler fixing the multi-threading, what will we have left to joke about…
We still have the GC jokes right they are not fixing that yet are they?
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We lost the foreach one.
As long as they don’t fix the terrain tools and the speed tree issues we still have frustrating/annoying comedy material…
OMG Unity 2018 might become un-funny, a near perfect game development system with all the tools you need working well and nothing to blame but your own lack of skills or ability!!! :p;)
Darn it in 2018 their batched multi-threaded job system can open the way for vast open world games using an origin shifting system already in PhysX…
What will I have left to complain about…
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While most of new stuff sounds amazing, from past experience I learned most features Unity Technologies adds isn’t really production ready on its release.
If it’s a complex system, like I imagine the Job System, Job Compiler and Nested Prefabs to be, I don’t expect it to work from day one. It most likely will work in isolated test projects, but I expect issues if there is an actual non-trivial game around it.
I’m rather skeptical and really careful with those new features in a production-project.
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I don’t need nested prefabs though 
I would not know what to do with that kind of power now. Possibly, the sky would fall.
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I realized nested prefabs would be very useful for me while I was building menus. However, not every project and workflow is the same, so I understand that not everybody needs it.
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I’m sure I’d find a use for it, I was just implying that it’s been so long that I’ve learned to cope without it 
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Wait, the new Input system was scrapped?! Man am I glad I didn’t hold out for that and bought Rewired now…
Never hold out for features
They had several iterations of the Input System. You can read about it in the stickied thread.
Butbut I already made my own with scriptable object heirarchies?
I believe, @Aras just gave us a new clue in his Unity in 2018 blog post about nested prefabs!
The emoji is named “unity2018-nest.png”. Considering the standard blue prefab cube, it might be short for “unity2018-nestedprefab.png”.
The Roadmap also shows “Improved Prefab Workflow” under the “development” category.
Nested Prefab’s does seem to become a reality
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I dunno, I think prefab ‘variants’ or prefab inheritance is more important than nested prefabs. Have a child monster that has all base components then more complex monsters that have custom properties (speed, stats, mesh, animations etc) and custom components. That way I can safely update the base prefab and have all changes propagate easily!
But who knows if it’ll be 2018:
“In-progress, timelines long or uncertain” doesn’t inspire hope that it’s near.
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Ha, you’ll have to keep posting your threads… Between stuff getting sorted and engine threads getting locked, not much to do around here.
I might have to start umm, making a game? Not sure how I feel about that.
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I’m starting to think that nested/branching prefabs are limited what about layered prefabs e.g.
A Super Soldier asset that can actually populate most of the humanoid game characters for a specific genre?
Layer AI/Controller
5: Player Super Soldlier
4: High level Enemy - Higher Range/Damge Weapons
3: Mid level Enemy - Medium “”
2: Low level Enemy - Low “”
1: NPC
0: Statue
All layered into one prefab, the layers would map to data/components/textures/weapons/animations.
The good thing about a layered approach is you don’t get into the nested looping problems you just assign a specific layer or disable it.
Also layers can be transferred between prefabs or setup as a style that would allow easy changes to entire subsets of prefabs?
It may need a bit more standardisation e.g. 3d models animation/UV cords to allow best way to build clothing/animation/tool layers.
Would a layers based approach work better than a convoluted nested prefab system?
I’m not sure what problem it’s solving that inheritance wouldn’t solve. Nested prefabs I agree is convoluted, Unity should do away with prefabs and scenes and replace it with just scenes. That way a ‘prefab’ is just a scene and a scene can contain scenes or derive from another scene.
My understanding of nested prefabs is exactly as you describe prefab inheritance. If not, what are we really getting?
My understanding is that they are separate concepts and both are being added. One allows and keeps correct references to prefabs under other prefabs, the other actually derives from\allows specialization of a prefab with another prefab.