I just upgraded to latest Lubuntu, and didn't have this problem before the upgrade, so I don't know if this is a Lubuntu problem...
When I maximize programs, I want them to overlap the panel. When I uncheck "Reserve space, and not covered by maximized windows", programs and windows will no longer lock to the panel, but the panel remains always on top. I've tested file manager, terminal, chromium, and other applications. (So for example, the terminal command line is hidden behind the panel.)
Before I downgraded panel or did anything else, I wanted to make sure I wasn't being stupid and missing a simple check box. Any ideas on how to fix this?
I am LXDE for about 8 days now by the way, and quite happy.