Mark Tucker

Looks like you're inspecting the flattened stage rather than the active layer? When USD flattens a stage, all implicit instance prototypes become "explicit" and show up on the stage as regular prims. In the scene graph tree you can turn on the display of implicit instance prototypes and you'll see this same /Flattened_Prototye_1 prim appear. I'm not sure exactly why flattening a stage saves out these implicit prototypes, but I'm sure there's a good reason for it.

Yep - UsdStagePrimMenu.xml.

What @tamte says is correct, and it is true regardless of the type/interpolation of the primvar being authored, because we have no way to know what type/interpolation of primvar may be getting overwritten by this SOP-generated layer.