It looks like this is just due to the stack order of the element. Styling is a little different on the remote NTP, where most positional elements specify a z-index. Importantly, ntp-contents specifies z-index: 1, but edit-bg does not. 

When the window is sized s.t. NTP area is less than the NTP content area (ie all the way down to the 2nd row of icons), ntp-contents is layered over edit-bg. Width of the window doesn't matter. Only height.

http://cl/209209349

This will go into the GWS release cut on 8/20.

 Issue 875732  has been merged into this issue.