Children of prefab disappear in Hierarchy when prefab parent is clicked,Children of prefab disappear in Hierarchy when prefab is clicked

This actually does sound like a bug. I've never experienced that. What version of Unity are you using, and what operating system?

When you select a GameObject in the hierarchy, its children are supposed to remain visible. Does this happen with all GameObjects or only ones with a certain script? It may be that a custom editor script you're using causes this behavior.

Create a new project, and add no scripts or assets to it. Create an empty in a new scene, and add a cube to it as a child. If it still happens there, it's a Unity bug. If it doesn't happen, it's likely an editor script in your project with a bug. Editor scripts are able to delete or alter GameObjects when your selection changes, so it's possible that one that's improperly written is doing that.

Let me know what you find out.

Yep, I think it's an editor script bug as I can't seem to replicate the issue elsewhere.

It's not my script, so tracking that down is probably out of my league at this stage (in terms of skill). But thanks for the heads up, I guess I'll try without the script and work around it.