Can't overwrite an existing Azure SQL Managed Instance database during restore
Yes, you will have to DROP the prior database before RESTORE as the REPLACE syntax isn't supported on Managed Instance.

Doing a RESTORE on Managed Instance (MI) will do some other work behind the scenes, too. In the General Purpose tier, you get one Azure Premium disk per data file, and that is handled completely by MI. This manifests in theRESTORE syntax by not allowing you to use MOVE (because the service essentially does that for you).

REPLACE is similarly disallowed right now, and I suspect it's also related to the magic of allocating storage and moving files on restore.