Working with Container controls

Need some help understanding how these work. Here's a simple example.
VS2012
New Project - One Blank Form
Add a "Panel" control - Background Pink
Add second panel - background Yellow
Move pinlk panel so it partially overlaps yellow panel but it's left edge is not overlapping yellow- looks OK as expected

Now, move pink panel to the right so it' left corner is within yellow panel and a portion of the pink panel becomes cutoff as if it's contained within the yellow Panel.


Can someone explain whats happening and what the rules are here?

Tried using Format/Order/moving pink to front with no success.

See picture..

Lee



Lee

Attached Images