For the past several days, Google's reverse image search feature has not properly worked for many searchers. Google has finally tracked down the issue and pushed out a fix just several hours ago. It seems based on the feedback in the ongoing Google Web Search Help there are many who have confirmed the fix is indeed working.
A Google top contributor posted in the thread:
I was advised a couple of hours ago (actually 2017/05/23 00:01 UTC) that the issue has been fixed.It's certainly working OK for me in Firefox, Chrome and Opera, but not in Internet Explorer or Edge. I do not have access to Safari to check.
If image drag and drop is now not working for you, make sure you have cleared browser cache and try again. If it's still not working, please let me know what browser you're using and which Google country domain.
This is how it should look:
I am not sure how popular search by image is but it is a nifty feature in my opinion.
Forum discussion at Google Web Search Help.