This behavior is by design. As far as I know, there is no way to change it.

The collapsed icons will show themselves as you move your mouse up and down over the launcher, just like you would do with your finger on a touchscreen.

You can re-arrange the order of the icons by clicking the icon and holding it for a second, dragging it to the right towards the desktop, and then dropping it where you want it higher up. The new order will be stay the same in future sessions.