React Dev Tools: “parse hook names” action throws a “Hook parsing failed” error

This is indeed related to how your webpack devtool selection handle source maps.

If you want a quick fix, try updating your webpack like so:

// webpack.config.js

module.exports = {
  //  ...

  return {
     devtool: "cheap-module-source-map",
     
     // or if you're using the same webpack config for prod + dev:
     // devtool: process.env["NODE_ENV"] === "development" ? "cheapmodule-source-map" : "source-map",

    // ... 
  }
}

The cheap-module-source-map has worked for me and some others here. But it isn’t necessarily the only one, and it comes with some tradeoffs. If you want to experiment with other devtools and understand more, see the webpack devtool docs