UE5’s Level Instance (and Packed Level Instance Blueprints, BPP) are a nice way to handle prefabs. However, we didn’t wait for UE5 to have those, and in UE4 you would just have Blueprints with visual-only components (e.g., SM, decals, FX).
So now I have hundreds of such “prefabs” Blueprints that are begging to be converted to the much better Level Instance system.
Is there any way to do convert Blueprint to Level Instance? And better: is there a way to do it in batch?
Hey, I’m asking myself the same question. So far, I’ve been told that it’s not possible and custom code is needed to even break a bluprint back into its original static meshes without merging them into one. Pretty bummed about it.
I tried changing the parent class of a BP to the Packed instance type but it loses its connection to the world because a level instance tied to it, was never created, and the Level Instance field is greyed out. Will keep digging but no luck so far.
have a look at rdbptools - it does all this 
rdBPtools - Recourse Design ltd.