Apparently JetBrains thought their Favorites panel bookmarks were too useful and made them simply link to the Project panel directory instead of expanding in the Favorites panel.
Now instead of having a separate list of scratches and notes files in its own panel, I now I have to scroll up and down the Project panel between code and scratches, both of which are huge lists of files and folders. I was using the Favorites panel folder list and its expansions for nicely-formatted notes and scratch files within PHPStorm, which was really nice. Now it's a giant pain in the ***.
How do I get back the previous functionality? I was using v202?.?.? before, now I'm using 2021.3.2, and I'm hating missing this old feature, nevermind the whole "Trusted Project" fiasco.