Thank you so much! A video speaks a million words and yours helped me to instantly identify what’s causing this.

What happens is that when you remove apps from a folder until one is left, that app remains as a folder, and currently this launcher doesn’t allow you to drag one folder over another.

A workaround is to tap that “folder” and drag that last app out from its “folder”, into the other folder you want it to be in.

A fix for this is planned, thanks for highlighting this confusing behaviour ;)