fix

Fixed issue with server only NetworkManager instance spawning the network prefab itself as opposed to creating an instance.
Extracted the instantiation portion of a network prefab into an internal method that can be used for integration testing prefab instantiation and potentially other edge case scenarios.

Author: NoelStephensUnity

com.unity.netcode.gameobjects/CHANGELOG.md

@@ -15,6 +15,7 @@ Additional documentation and release notes are available at [Multiplayer Documen
 
 ### Fixed
 
+- Fixed issue where a sever only `NetworkManager` instance would spawn the actual `NetworkPrefab`'s `GameObject` as opposed to creating an instance of it. (#3160)
 - Fixed issue where only the session owner (as opposed to all clients) would handle spawning prefab overrides properly when using a distributed authority network topology. (#3160)
 - Fixed issue where an exception was thrown when calling `NetworkManager.Shutdown` after calling `UnityTransport.Shutdown`. (#3118)
 - Fixed issue where `NetworkList` properties on in-scene placed `NetworkObject`s could cause small memory leaks when entering playmode. (#3147)

com.unity.netcode.gameobjects/Runtime/Spawning/NetworkSpawnManager.cs

@@ -736,12 +736,20 @@ public NetworkObject InstantiateAndSpawn(NetworkObject networkPrefab, ulong owne
         internal NetworkObject InstantiateAndSpawnNoParameterChecks(NetworkObject networkPrefab, ulong ownerClientId = NetworkManager.ServerClientId, bool destroyWithScene = false, bool isPlayerObject = false, bool forceOverride = false, Vector3 position = default, Quaternion rotation = default)
         {
             var networkObject = networkPrefab;
-            // Host spawns the ovveride and server spawns the original prefab unless forceOverride is set to true where both server or host will spawn the override.
-            // In distributed authority mode, we alaways get the override
-            if (forceOverride || NetworkManager.IsHost || NetworkManager.DistributedAuthorityMode)
+            // - Host and clients always instantiate the ovveride if one exists.
+            // - Server instantiates the original prefab unless:
+            // -- forceOverride is set to true =or=
+            // -- The prefab has a registered prefab handler, then we let user code determine what to spawn.
+            // - Distributed authority mode always spawns the ovveride if one exists.
+            if (forceOverride || NetworkManager.IsClient || NetworkManager.DistributedAuthorityMode || NetworkManager.PrefabHandler.ContainsHandler(networkPrefab.GlobalObjectIdHash))
             {
                 networkObject = GetNetworkObjectToSpawn(networkPrefab.GlobalObjectIdHash, ownerClientId, position, rotation);
             }
+            else // Under this case, server instantiate the prefab passed in.
+            {
+                networkObject = InstantiateNetworkPrefab(networkPrefab.gameObject, networkPrefab.GlobalObjectIdHash, position, rotation);
+            }
+
             if (networkObject == null)
             {
                 Debug.LogError($"Failed to instantiate and spawn {networkPrefab.name}!");
@@ -824,16 +832,37 @@ internal NetworkObject GetNetworkObjectToSpawn(uint globalObjectIdHash, ulong ow
                 else
                 {
                     // Create prefab instance while applying any pre-assigned position and rotation values
-                    networkObject = UnityEngine.Object.Instantiate(networkPrefabReference).GetComponent<NetworkObject>();
-                    networkObject.transform.position = position ?? networkObject.transform.position;
-                    networkObject.transform.rotation = rotation ?? networkObject.transform.rotation;
-                    networkObject.NetworkManagerOwner = NetworkManager;
-                    networkObject.PrefabGlobalObjectIdHash = globalObjectIdHash;
+                    networkObject = InstantiateNetworkPrefab(networkPrefabReference, globalObjectIdHash, position, rotation);
                 }
             }
             return networkObject;
         }
 
+        /// <summary>
+        /// Instantiates a network prefab instance, assigns the base prefab <see cref="NetworkObject.GlobalObjectIdHash"/>, positions, and orients
+        /// the instance.
+        /// !!! Should only be invoked by <see cref="GetNetworkObjectToSpawn"/> unless used by an integration test !!!
+        /// </summary>
+        /// <remarks>
+        /// <param name="prefabGlobalObjectIdHash"> should be the base prefab <see cref="NetworkObject.GlobalObjectIdHash"/> value and not the
+        /// overrided value.
+        /// (Can be used for integration testing)
+        /// </remarks>
+        /// <param name="networkPrefab">prefab to instantiate</param>
+        /// <param name="prefabGlobalObjectIdHash"><see cref="NetworkObject.GlobalObjectIdHash"/> of the base prefab instance</param>
+        /// <param name="position">conditional position in place of the network prefab's default position</param>
+        /// <param name="rotation">conditional rotation in place of the network prefab's default rotation</param>
+        /// <returns>the instance of the <see cref="NetworkObject"/></returns>
+        internal NetworkObject InstantiateNetworkPrefab(GameObject networkPrefab, uint prefabGlobalObjectIdHash, Vector3? position, Quaternion? rotation)
+        {
+            var networkObject = UnityEngine.Object.Instantiate(networkPrefab).GetComponent<NetworkObject>();
+            networkObject.transform.position = position ?? networkObject.transform.position;
+            networkObject.transform.rotation = rotation ?? networkObject.transform.rotation;
+            networkObject.NetworkManagerOwner = NetworkManager;
+            networkObject.PrefabGlobalObjectIdHash = prefabGlobalObjectIdHash;
+            return networkObject;
+        }
+
         /// <summary>
         /// Creates a local NetowrkObject to be spawned.
         /// </summary>