How to reproduce:
1. Create new project
2. Create new Cube object
3. Make it a prefab
4. Drag prefab from Project tab to Scene

Expected result: Prefab appears as instance in Hierarchy, at mouse location in Scene and can be selected
Actual result: Prefab does not appear in Hierarchy and only mesh is shown in the Scene at the dragging entrance point, same prefab cannot be selected in Scene

Reproduced with: 2022.1.0a10, 2022.1.0a13
Does not reproduce with: 2022.1.0a9, 2021.2.0b17

Note: Materials also cannot be dragged and applied to objects in the Scene