I think this is the correct behavior. It is not opinionated about the value of the section's overflow.

Applying overflow: hidden facilitates the desired animation.

http://codepen.io/timmywil/pen/yjKfd

How can it be the correct behaviour if jQuery doesn't animate over the displayed height?

If jQuery uses a theoretical height instead and the animation jumps/isn't fluid/has glitches, isn't the animation broken?

Margin collapse is a CSS feature. If jQuery decides not to support it maybe that should be in the documentation..