Warning 16006: Cannot Drop Duplicate Named Items in Editor Target

Items could not be added to the target '[target name]' because another file with the same name is already present.

Why does this warning occur?

You dragged an item into the Editor, but the item cannot be added to the specified target location because an item with the same name already exists.

How do I resolve this warning?

Create a subdirectory for the duplicate named item or find a different location.