"Fabric Mods (mod resources)" in the resource pack folder is put above resource packs when loading into Fabric with a resource pack already on. You have to have been playing in a version that is not Fabric (Vanilla/OptiFine/Forge/etc) beforehand for it to be put above the resource packs. "Fabric Mods" being put above resource packs breaks a ton of resource pack things (custom item textures, ctm, and much more), and thus should never happen by default.

Also happens when the old version was vanilla (or fabric loader without fabric api)

To reproduce:

1. Open the game without fabric api installed
2. Add any custom resource pack
3. install fabric api and restart the game
4. Look at the resource pack order

Might be something that could be fixed alongside #3782 as it's to do with how the Fabric Mods resource pack works (probably)