Understanding prefab updating its instances

When does a prefab update it’s instances?

Say I do the following:

  1. Create a new Unity 4.x project
  2. Add a cube to the scene
  3. Drag the cube to the project panel; creating a prefab
  4. Select that new prefab and modify its Y rotation to 30
  5. Select the cube in the scene again and see a Y rotation still at 0

Why isn’t the cubes Y rotation updated to 30? Is the a way to get the prefab to propagate the rotation change to its instances?

Click the the cube, in the inspector you have “revert” this will revert the prefab in scene to the state of the prefab in project.

Same goes to “apply”, if you change stuff in the cube in the scene and press apply, it will update the prefab in the project.