Auto-hiding the dock covers the desktop icons

The current answer is you can't. This is a known bug since 17.10, https://bugs.launchpad.net/ubuntu/+source/gnome-shell-extension-ubuntu-dock/+bug/1723117

So didn't really fall thru the cracks, there isn't atm anyone assigned to fix as the most important thing about the Desktop version of Ubuntu currently is to limit the amount of resources used on it. (i.e money

I wouldn't say this is because of Canonical removing resources from the desktop, as another answer states. After all, the dash-to-dock extension is independently developed and used in other distributions too (for example, Manjaro).

Apparently, the issue cannot be solved at the extension level (https://github.com/micheleg/dash-to-dock/issues/17). So it's not that easy to fix without upstream changes, and upstream they already decided against desktop icons, so...

OTOH, probably intellihide (the current behavior) is better than autohide for Ubuntu, even with the bug. IMO, Ubuntu should remove the desktop icon extension for good, at some point.

I would say: just move your dock to the bottom or the right (so it's not true that the bug completely breaks the intellihide feature, as some comment states).