Figured it out and wanted to create a question for posterity.
Disable the flag - chrome://flags/#views-browser-windows
Enable the flag - chrome://flags/#enable-fullscreen-toolbar-reveal
Go to View Menu and uncheck - Always show Toolbar in Full Screen
Tada!You will need to relaunch chrome to see the required functionality enabled again.
P.S.: This also brings back old chrome look without the round edges.
Answer taken from this thread created specifically to fix this issue on google help forums for chrome
edit: this solution is dead on newer versions of chrome(70+) as the required flags have been removed. the chrome devs really don't care about regressions in UI i guess