Probably a confusing question title.
The Grid with the Red Rectangle is an example of how it should look.
The Grid with the Blue Rectangle (not appearing in
There are three things that go into to determining how something clips. The first two are ClipToBounds and Clip, but the third is a little more annoying and that is GetLayoutClip.
By default, for UIElement the GetLayoutClip method will return either null or a RectangleGeometry the same size as the element, depending on the ClipToBounds property. FrameworkElement, and it's derivations, are much more complex though. Take a look in Reflector/ILSpy and you will see what I mean.
You can override this behavior though. If you use something like the following as your Grid for the blue rectangle, then it will no longer be clipped:
public class MyGrid : Grid {
protected override Geometry GetLayoutClip(Size layoutSlotSize) {
return null;
}
}
There is a great blog post on this here.