Removing Padding from a Text component

Hello everyone, Its been a a week since I started learning Figma, and I am running into the following issue.

When I remove the horizontal and vertical padding from the auto layout frame of an instance  of a Text Component, I see that the frame does not wrap the text. It just reduces its height to 0 

Here are the steps which I followed.

1. Created a text field and wrapped it in autolayout, added a stroke. 
2. Converted it into a component
3. Added another variant , named them Default and Hover.
4. Created the instance .
5. Set the horizontal and vertical padding to 0 in the instance .

I was expecting to see the autolayout frame wrapped around the text. I am unable to understand , why setting the padding to 0 leads to this.

As a test, I tried adding fill to the instance. Initially it did not appear, but when I reset the padding values, the fill appeared.

Please have a look at the screenshots I have attached.