Incompatible Render Engine
WHY DO I SEE A CYAN AND BLACK CHECKERS TEXTURE?
The material you are using is not compatible with the current render engine. If you are using a Cycles-only material with Eevee as your render engine, you will see the checker texture. This also applies if you are using a Cycles-only material and have Cycles as your render engine, but are using the Material Preview instead of the Rendered preview. (Material Preview always uses Eevee, even if your selected render engine is Cycles).
WHY WAS THIS IMPLEMENTED?
This was implemented to prevent slow viewport performance and long processing times that could lead to Blender crashing. Materials that are only compatible with one render engine can cause issues if processed by the other engine. This implementation prevents those issues by immediately indicating the incompatibility.
WHICH MATERIALS ARE AFFECTED?
Only engine-specific materials marked with a letter overlay icon in their thumbnails are affected.
* E: Eevee only.
* C: Cycles only.
Materials without a letter are compatible with both render engines.
DOES IT CHANGE ANYTHING ABOUT AVAILABLE MATERIALS?
No, you can still use the same materials as before. Previously, an incompatible material would not work correctly and could slow down your viewport. Now, you will immediately notice the incompatibility without performance issues.
CAN I DO ANYTHING TO USE A NON-COMPATIBLE MATERIAL?
You may be able to use Cycles materials in Eevee, but it is generally not possible to use Eevee materials in Cycles.
In some cases, you can use a Cycles-only material in Eevee by baking it using the Sanctus Library baking tool.
Eevee-only materials are relatively rare. They are usually Toon materials or alternative versions of Cycles materials specifically made for Eevee. In these cases, it's generally not possible, since baking always uses Cycles.
Note
Baking always uses the Cycles render engine.