This is not fixed on my Surface Pro 6, tested with Dev and Canary a few minutes ago, all up-to-date. Maybe the touchscreen of the Surface is confusing PiP mode, but the overlay won't go away after a few seconds, and it doesn't even detect that the mouse is not over the PiP window anymore. It's working as intended on my desktop, without a touchscreen.
But I don't know why, the Project Member responsible for this bug is not testing the right thing and is claiming the bug cannot be reproduced! He's testing the mini-player inside YouTube instead of the PiP. Both are very different things, the mini-player of YouTube is just a feature of the website that's available on any browser, not a UI element of Chromium like PiP.
I only see this bug on a touchscreen, so maybe Microsoft should look at it themselves, since touch support is a big deal in Windows 10 and for Surface devices.