Why is dragging a prefab into the scene creating a clone instead of instance?

After creating a prefab, how do I add an instance to my scene? When I drag the prefab from the Project Window to the Scene or Hierarchy windows, it creates a “Clone” that doesn’t seem to actually be an instance of the prefab. I can test this by changing the prefab in Prefab view and see that the “Clone” does not change.

I have gone through Unity Learn tutorials on prefabs with no issue, but now that I am trying to use them in a 2D project, I am getting different results from the same workflow. I have had trouble finding an answer on various forums. I am sure it is a simple misunderstanding of the process, and I appreciate the help.

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This problem resolved itself, but I am unsure how. But the same process now works as expected after restarting Unity again (I had tried this earlier as well).

Anyone else having this issue: Try closing and reopening Unity.