While we await a definitive answer, I've been exploring possible answers. I was able to resolve the issue by logging out and logging back in using X instead of Wayland.
If using Wayland is a requirement, then the best result is obtained thusly:
I had a very similar result until I adjusted the external monitor's dimensions to more closely match those of the built-in monitor. I did this using the GUI sequence:
<right-click> on the display
choose Display Settings.
I adjusted the resolution of my external monitor from 1920x1080 to 1360x768. Now that the vertical resolution of both monitors is 768, all works as expected. Hope this helps.
I vaguely recall having done the same thing when I first set up my dual-monitor solution under 17.04. So, I think it's the case that the 17.04 -> 17.10 upgrade process failed to retain those earlier settings.
If you're more of a command-line user, then
gnome-control-center display is the command that will enable you to adjust the resolution of your display.