this report has been filed here:

https://bugs.launchpad.net/ubuntu/+source/nautilus/+bug/886395

"Text no longer condenses (cuts off) for desktop icons with long names."

""Keep Aligned" was and is still turned on. In the first pic the icons were as close together as keep aligned would let them be (0 icons worth of space in between). In this new pic, the icons are separated by 1 icon worth of space, again according to keep aligned.

Whether the icon is selected or not, the text never condenses at all."

"Further testing:
The text will eventually condense - I tripled the name of the second (from left) icon and it did eventually condense.

However, not soon enough to make anything readable with the minimum icon separation dictated by "Keep Aligned". I expected it to condense enough to not interfere with neighboring icons, but instead it did not condense and did interfere.
"

screenshot

https://launchpadlibrarian.net/84803772/icons1.png