Same problem Apple team, this isn't a case of users not understanding how to arrange icons. It seems to occur only with my iPad Pro.
Error Observation:
Device: iPad Pro 4 w/ 17.1.2
Situation: i drag & drop an icon into the folder.
Result: iOS moves the icon into the folder AND places a duplicate icon on the home screen. selecting "remove app from home screen" removes the app from BOTH the home screen and the folder i just placed it into.
Expected Functionality:
Device: iPad 7 w/ 17.1.2
Situation: i drag & drop an icon into a folder.
Result: iOS moves the icon into the folder and REMOVES the icon from the home screen.
Bottom line: currently with the pro, it's not possible to remove an app from the home screen without also removing it from the folders. it's crazy. help.