Well, we can just disagree on that. I agree an option to make the dock act like you want would be a good idea, but I prefer it the way it is.
YES, IT DOES. There must be something up your end. Here are my dock settings.
Unless it's because you're still using a mouse.
Dude, you're talking out of the side of your donkey.
When running an app in FULL SCREEN MODE IN LION, the dock does NOT show up if it is placed on the left or right side.
Trust me, I've tried. MANY times. It only shows up if it's pinned to the bottom. I don't use it that way because on the MacBook Air, the top-to-bottom screen real estate is too valuable to waste having it on the bottom, versus on the left where there is plenty of horizontal room. It's not about a setting. It's broken.