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Changing models in design

I see videos of people using asset packs and copying a piece moving it then like magic it changes into a different type of piece. I bought the medieval village pack and would like to know how people are doing this. They put a main floor section down, copy it, drag it up, then like magic it doesnt have a door anymore and is a middle section.

Best guess is whats added to the environment is not a static mesh but a blueprint component that includes a selection of different prefabs added to a pull down list that can be selected from say a dozen different objects.