The hierarchy pane works differently in later versions of unity.
When an object is linked to a prefab it gets a solid blue cube next to it.
When you have a modified or unique object you get a hollow cube icon.
If you have a compound object such as an object you have imported as an obj from a 3D editor you
get a cube icon that looks like a small stack of books.
I think the prefabs under existing prefabs reflect the prefabs in the project window.
I have a “success particle” effect under my rocket prefab
I dragged on a new success particle effect and edited it by changing it’s colour, and pushed the changes to the original “success particle” prefab .
The effect was updated on the rocket as well