JSFiddle - React, Tailwind, and code Playground

HTML

<div class="scrollable">
    <ul class="menu">
        <li>Menu
            <ul class="submenu">
                <li>Submenu</li>
                <li>Submenu</li>
                <li>Submenu</li>
            </ul>                   
        </li>
        <li>Menu
            <ul class="submenu">
                <li>Submenu</li>
                <li>Submenu</li>
                <li>Submenu</li>
            </ul>                   
        </li>
        <li>Menu
            <ul class="submenu">
                <li>Submenu</li>
            </ul>                   
        </li>
        <li>Menu
            <ul class="submenu">
                <li>Submenu</li>
                <li>Submenu</li>
                <li>Submenu</li>
            </ul>                   
        </li>
        <li>Menu
            <ul class="submenu">
                <li>Submenu</li>
                <li>Submenu</li>
                <li>Submenu</li>
            </ul>                   
        </li>
    </ul>
</div>

<div style="margin: 150px; width: 100px; height: 100px; background-color: #ff0000; overflow: hidden;">
    Div with overflow hidden
    <div style="position: absolute; margin: 20px 0 0 20px;">
        <div style="width: 300px; height: 200px; background-color: #cccccc;">
            In this case this div is outside of it's parent.
        </div>
    </div>
</div>

CSS

ul {
    margin: 0; 
    padding: 0; 
    list-style-type: none;
}
.scrollable {   
    position: absolute;
    top: 0;
    left: 0;
    
    overflow: hidden;
    /*
    overflow-y: scroll;
    overflow-x: hidden;
    overflow-x: visible;
    */    
    width: 100px;
    height: 100px;
    border: 1px solid #ff0000;
    padding: 10px;
}
ul.menu > li{    
    /* even if i set position to absolute the hover div wont show */
    /*
        position: absolute;    
    */
    color: #ff0000;
}
li {    
    background-color: #dddddd; 
    line-height: 50px;
    height: 50px;
    border-bottom: 1px solid #fff;
    display: block;
}
.submenu { 
    width: 200px;
    display:none; 
    margin: -45px 0 0 70px;
    border: 1px solid #000;
    position: absolute;
    z-index: 100;
}
.menu li:hover .submenu {
    display: block;
}