Make the resource the minimum size, then increase the dialog size when it's created, using the width and height properties (which it looks like you already found, if that quote is from the docs on them).
First, nothing needs to go off "screen" just because the window gets a bit smaller than the default dimensions, the controls can shrink and be visible. In an imaginary responsive interface a button with a full text of "Press me to do this" can become a small "do this". Or a real WordPad ribbon control disappears when the window height becomes too small to fit it
But even in those cases (going off "screen") there is nothing ridiculous about it - the dialog window isn't the only / most important UI element, and neither are its controls
For example, say all you need from this window of closed tabs is information to compare to your editor's tabs, so you could just resize the dialog to hide the bottom buttons (which you won't use) and the bottom listview (which is tabs from another pane, so again not something you need) and only have the top listview visible giving you only what you need without obstructing other important UI like the main tab bar
But it's fine for the default view to obstruct because the default use case is different
Overlap is bad, but that's because the control stop serving their function - you can't control if controls are on top of each other. And their information function is also impaired
The more relevant question is why does the initial size is stop it instead of some explicit "mandatory min"? This just makes the Dialog editor less useful since you can't mock the "default" view there since it has this liability of not being reducable even if it has no negative sideffects (in many of those "a bit smaller" cases)