Auto Layout Wrap - spacing

Hello all! I am enjoying the new variables and the wrap function, but there is one issue that I am yet to figure out why it is happening.

If you look at the screenshot below, there is a gray rectangle that overlaps with another frame when this mode (small viewport) is selected. It does not happen in other modes (larger viewports). Is this a bug? It works properly if I select fixed spacing (like 16px), but happens again if I switch the spacing to auto. Again, it only happens with this variable mode out of the 4 variable modes I set.

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