I doubt that it ever worked in older versions, and even if it did it will not work in other widgetsets. The TLabel (and TStaticText) simply were not designed having in mind rotated text. The rotation occurs around the top/left corner of the text and thus move the text out of the original bounds when the text is put vertically.
It is not difficult to fix -- see the attached demo. Instead of modifying the original TLabel I introduced a new TVertLabel which inherits from TLabel and thus has everything you know from TLabel. I override the Paint procedure to place the text at the correct position, and I override the CalculatePreferredSize method which does the AutoSize calculation (simly exchange Width and Height here).
P.S.
Next time when you post a message please don't waste your time creating a video. It is certainly faster to type here all the text what you typed into the video, and when you add one or two screenshots everything is clear. The main objection against the video, however, is that it is stored outside the forum and will certainly be gone after some time. Since all your description is contained in this video the forum post will not be understandable any more for every user seeing your post after the video has disappeared from youtube.
For those user who see this post: The video shows that vertical text is not displayed in a TLabel.
1. Initially, I designed the form using gtk2 layer. It works perfectly in 2.0.10 both in 900 and 2600 rotation - two years of usage. In Lazarus 2.0.10 with Qt5 at least, the vertical labels designed previously in gtk2 are correctly displayed,
without clipping the text as it does in 2.1.0. You can also resize the rectangle without the text to be clipped - this seems to be specific only to Lazarus 2.1.0 SVN so there are new bugs introduced. In 2.0.10 using Qt5 is the same problem with alignment (Top, Bottom, Center). Temporary solution is to continue using Lazarus 2.0.10, designing using gtk2 based components and compiling the project for Qt5.
2. Thank you for the code solution, it is highly appreciated and might be of use also to others but I have my reasons to use the visual components as they are (for that specific app of mine), the functionality is already there in those based on gtk2.
3. The movie will stay then, I see your point and this is how I do usually. Somehow, I was afraid that someone already exposed this TLabel bad behavior. But I completely disagree with you regarding the clarity of presentation. It is said that a picture values more than a thousand words, imagine how much value is in an entire animation that shows the problem more accurately. You know, English is not my native language, in video there is presented complex behavior, I would have done a lousy job trying to describe that with my own words and some screenshots (I know how hard is to show people what I want to say - I know, I've already posted two threads

).