This works well for me, too!
(I find the nomenclature a bit confusing, though: disabling this setting enables the scrollbars; but I understand that primarily the overlay is meant, not the scrollbars. )
However: Is it correct that Sublime Merge build 2082 does not activate the scrollbar overlay, even when enabled, if the mouse pointer is only hovering over the correct position?
Details: When I have the overlay enabled and put the mouse pointer in the proper place, nothing happens. Only when the scroll wheel of the mouse is used the overlays is activated. (Once it has been activated, it can normally be used with the mouse pointer.) The problem is that that the scrollbars, when the overlay is enabled, cannot be activated with a touch pad or pen alone, because a mouse wheel input is required to have the scrollbars become visible.
Summary: With the overlay enabled, is there any way to activate the scrollbars other than a mouse wheel that works with a touch pad or pen?