The idea is to use all the screen space, when needed, but to see the panel otherwise. I think kde has this feature but I have never tried. However, I use cairo-dock with its own panel (instead of cinnamon panel) for this reason. I can place my windows everywhere (no place is reserved for the panel) and panel is kept below (or hidden) if the window is maximized or simply placed over the panel.
The actual autohide feature "always hide" after a giver delay. But that means that indicators, clock and other applets are always hidden and the user has to unhide the panel to see them. The idea is the have the panel hidden only when necessary.