Hi, new to Obsidian in all ways, this is good to know though because I have this exact problem except I got there by option-clicking the green Maximize button on the Obsidian frame. (regular click = go into Full Screen Mode; option-click = Maximize Window)
The way I figured out what was going on was by using the Mac’s Mission Control → Application Windows (only) view, which shows you all open windows just for the currently focused app. I had a second window open with Obsidian’s own help, did that, and spotted this little ditty:

Going into Full Screen allowed me to at least make that folder/window usable again, but yeah it was very much not expected behavior, and because Obsidian launched for the first time in Maximized mode, I immediately went to adjust that.
I’m only adding this extensive comment on an existing bug because the frameless window header behavior that is being discussed above won’t solve this problem as the problem is the lack of minimum window width & height sizing. The opt-click Maximize button will still trigger this bug regardless of frameless chrome.