Huh, that's a first. I just tried via build 206 and it worked fine, resolution 1280x720 (window), 1440x900 (monitor). Mighty nice looking world there, what resolution are you running at? Looks huge judging from the icons, and it seems you maximized the window, maybe that's related? Try in the default size
Oh, ya, I just tried F12 in a maximized window, same story. That's a bug, thanks for finding it!
Created
https://github.com/MovingBlocks/Terasology/issues/265 so we don't forget to fix it