This happens because the the indicator applet now uses Gtk3 indicators.
In gtk3, the menu placement code has been rewritten in gdk. It now
follows the struts and _NET_WORKAREA_GEOMETRY more closely.

This X atom is used to inform all applications which areas of the
display are covered by panels. gdk will attempt to stop menus from
overlapping these areas, and the window manager will attempt to keep
fullscreen windows from overlapping these areas (those would appear
behind panels, menus in front.)

So clearly the autohide panel should not squash fullscreen windows. It
should appear above them. But that means when the panel unhides, it
can't set a strut. And that means gdk3 will draw menus on top of it.
Gtk2 continues to not do this though, for reasons I don't understand.

So this appears to be a regression in Gdk3, which is also the cause of
https://bugzilla.xfce.org/show_bug.cgi?id=10625

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https://bugs.launchpad.net/bugs/1416843

Title:
  Indicator element appears over the panel, not above

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