How to reproduce:
1. Open the attached “IN-96728” project
2. Open the “SampleScene” Scene
3. Enter Play mode
4. Observe the Game window

Expected result: The Capsule GameObject does not clip through the terrain
Actual result: The Capsule GameObject quickly clips through the terrain and then snaps back upwards when colliding with the terrain

Reproducible with: 2022.3.60f1, 6000.0.42f1, 6000.1.0b10, 6000.2.0a6

Reproducible on: Windows 10 (User), Windows 11
Not reproducible on: No other environments tested

Note: To reproduce in the 2022.3.60f1 version untick the X, Y, Z boxes in the Capsule GameObject Inspector window “Freeze Rotation” option