when you have an vertical panel and want to use the folder applet, there is a huge padding available.
also the minimum size for the desktop icon view is fixed to a great size.
Created attachment 99545 [details]
folder applet in sidebar
possibly related to - https://bugs.kde.org/show_bug.cgi?id=384893
*** This bug has been marked as a duplicate of bug 406806 ***
I'm not sure how this bug is a duplicate of bug 406806
Oops, my mistake.
In fact the issue in this bug report has simply been replaced with the one in bug 406806.