Be sure that your controls have the "nf-section" CSS class added to them. Add this to the control's "CSS class" property. This appears to be important for the Nintex Forms containers to work properly. Otherwise, your panels will hide via rules, but the UI will not adjust accordingly. The blank empty space will be left behind where you hide the panel.
Using the nf-section class on your panels, the lower panels will slide up to fill the empty space.