You are not missing anything. This is a strange issue indeed. We did some local tests and we achieved the same results. We will investigate what is causing the problem and we will try to fix it right away.
For the time being, you can set the orientation in xaml, like TabOrientation= "Vertical"
, or you can add Loaded event to the parent (Page or User Control) and use it to make TabControl vertical.
the Telerik team
Check out Telerik Trainer
, the state of the art learning tool for Telerik products.