==UPDATE==

As per comments, here's a detailed description of my scene:

1 camera, 1 terrain (with a bunch of brushed in deformations), 1 directional light. I also have a .blend file in my Assets folder, which is automatically imported and I get my aStarCellHighlight prefab which is a cube with a transparency/diffuse texture:

to the camera I have attached to following script, to which I've then "bound" the terrain and aStarCellHighlight in the corresponding public fields:

public class RTSCamera : MonoBehaviour {
    
    public Collider terrain;
    public GameObject aStarCellHighlightPrefab;
    
    private bool isCursorOnTerrain;
    private RaycastHit cursorPositionOnTerrain;
    private GameObject aStarCellHighlight;
    
    void Start () {
        cursorPositionOnTerrain = new RaycastHit();
        aStarCellHighlight = (GameObject)Instantiate(aStarCellHighlightPrefab, terrain.transform.position, terrain.transform.rotation);
        aStarCellHighlight.name = "cellHighlight";
        aStarCellHighlight.transform.parent = terrain.transform;        
    }
    
    void Update () {
        trackCursorOnTerrain(false);
        placeCellHighLight();
    }
    
    private void trackCursorOnTerrain(bool debug) {
        Ray ray = this.camera.ScreenPointToRay(Input.mousePosition);
        
        isCursorOnTerrain = terrain.Raycast(ray,out cursorPositionOnTerrain, 5000);
        if(debug) {
            if(isCursorOnTerrain) {
                Debug.DrawLine (ray.origin, cursorPositionOnTerrain.point);
                Debug.Log("terrainRight="+cursorPositionOnTerrain.point.x+" terrainUp="+cursorPositionOnTerrain.point.z+" terrainAltitude="+cursorPositionOnTerrain.point.y);
            } else {
                Debug.DrawLine (ray.origin, ray.GetPoint(5000));
            }
        }
    }
    
    private void placeCellHighLight() {
        aStarCellHighlight.transform.localScale = new Vector3(50,50,200);
        if(isCursorOnTerrain) {
            aStarCellHighlight.transform.localPosition = cursorPositionOnTerrain.point + new Vector3(0,200,0);
        } else {
            aStarCellHighlight.transform.localPosition = Vector3.zero + new Vector3(0,200,0);
        }
    }
}

The script is supposed to basically draw a ray from camera's mouse cursor screen position to terrain, and then instantiate the Blender cube prefab, add is at a child of terrain, scale it to a visible size, and move it around on the terrain to where the mouse is, you know , "projecting" or whatever it is called.

when I hit play I the Blender prefab instance is created right away, it is shown as a descendat of terrain, is just not scaled properlly. Also if I move the mouse right away, the cube doesn't move with it:

Finally, if I just wait 10-20 seconds, the cube gets scaled, and now it moves with the cursor on the terrain:

Thanks for all any help!