The shadow in a layer/group is still accounted as width/height in a Repeat Grid. This makes the Grids useless/unusable in many situations. It makes it impossible to assign the desired spacing between elements (unless deploying shapes or guides).
Just like in the HTML Box Model, shadows shouldn't be accounted for spacing in XD.
In this example, I just want the cards to be 5px away, but there's no way of telling because of the absurd sizing the shadows add.
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That's a good catch, and it hurts – ouch !
The rationale behind it is to let the Repeat Grid cell reflect the size needed for the expeorted image, including the shadow. But layout-wise that's not very useful or practical. Fortunately, the gutter between the repeated items can be moved to a negative distance, making it possible to overlap the shadows between cell items. But it doesn't help aligning the outer boundaries of the Repeat Grid items.
This UserVoice thread raised and discusses the problem since a year, and it reveals that the cell size is indeed correlating with the necessary image size, to prevent cut-off shadows, line widths, etc. Let's hope the developers are willing and able to implement separate measures for real cell content and the resulting image size, and serve both purposes more appropriately. Vote for the request !
If my memory is not wrong, I remember this being fixed time ago for components, that had the same issue upon release. If you apply shadow to an object withing repeatgrid, attached to the border of the grid, the shadow is cut. And if you apply repeat grid to an object that is shadowed, the border is extended to contain even the shadow, so the spacing between objects in grid cannot be managed correctly. Object itself, even if grouped or within component is confined correctly. This should be fixed ASAP.
The team explored the possibility of changing this feature but fixing this would have resulted in other issues with the repeat grid. Unless there is a strong case in future for the team to revisit their decision, it looks like there will be no chnages to the way this feature works.