Reproduction steps:
1. Create a new project
2. Create Terrain GameObject and save changes (GameObject > 3D Object > Terrain)
3. Install Multiplayer Play Mode package (Window > Package Management > Package Manager)
4. Open Play Mode Scenarios window (Window > Play Mode > Scenarios), add a new Scenario and an Additional Editor Instance
5. Select the newly created Scenario as the active Scenario and enter Play mode
6. Enable Hierarchy, Inspector and Scene windows in the Player 2 window Layout dropdown
7. Select Terrain in the Player 2 window hierarchy and ensure that “Create Neighbor Terrains” button is selected in the Inspector
8. Click on any of the empty Terrain tiles in the Scene view and observe the Console
Actual result: “NullReferenceException: Object reference not set to an instance of an object” error is thrown and no Neighbor Terrains are created
Expected result: No errors or warnings are thrown and Neighbor Terrain is created
Reproducible with: 1.6.3 (6000.0.80f1), 2.0.2 (6000.3.20f1, 6000.5.6f1), 3.0.0 (6000.6.0b6, 6000.7.0a3)
Reproduced on: Windows 11, macOS Tahoe 26.5 (M4)
Note: Neighbor Terrain gets created after focusing on the Editor window and focusing back on the Player 2 window