You can see this fix in-action here:
(Full Fiddle source: http://jsfiddle.net/MoonScript/vLyfU/7/)
Once you grab an item and start dragging up and down, move your mouse to the left as you drag, and you'll see that the yellow placeholder element will move up and down along with your mouse.
You can see how it currently works to compare:
Sortable: update placeholder when axis is x or y. Fixed #8274 - place…
…holder doesn't move when dragging outside of container element
Thanks, landed in b8b0c52.