I am so sick of this also and couldnt find a solution to it. It is INSANE that you can make the video insanely small but not the navigation.
•Anyway, the only solution I found is to UNCHECK View-->Docked Playlist.
•Once undocked, you should have two separate windows. 1 with video and one with playlist.
•On the playlist, you can drag the separation bar between the playlist titles and the ANNOYING navigation all the way to the left so that it looks like it is part of the window border. This will hide the navigation.
•Now, resize the video window to whatever you want as well as the playlist. downfall is only that you have the window border between them.
If you have found a solution that works better, by all means, let us know! I made an account specificaly for this here so that I could share. It annoys me THAT much. Hope I helped! Enjoy!