ImageIcon extends beyond window, resizing window expands all of components instead of showing more

You are using a GridLayout. This gives all of the enclosed panels the same amount of space. In this case it is a vertical grid.

You should probably use something a bit different. I might try a BorderLayout in the JFrame and put the a panel containing the top seven panels (in a GridLayout) into the CENTER, and then put the JLabel into the SOUTH portion of the JFrame.

There are other ways to lay it out, but this is the first I could think of.

GridLayout makes each cell in the grid the same size and the size of each cell is determined by the largest Component contained in the grid.

In your code, the icon is the largest component and you also have only one column in your grid so every row has the same height as your icon.

Since you also limit the size of your JFrame by calling method setBounds(), the Swing infrastructure cuts off the icon so that all the components fit into the bounds you specified.

One alternative, but not the only one, is to use BoxLayout since it uses the preferred size of each of its contained components.

Here is a sample GUI that matches the screen capture that you posted and uses BoxLayout.

import static javax.swing.WindowConstants.EXIT_ON_CLOSE;

import java.awt.BorderLayout;
import java.awt.EventQueue;

import java.net.URL;

import javax.swing.BoxLayout;
import javax.swing.Icon;
import javax.swing.ImageIcon;
import javax.swing.JButton;
import javax.swing.JFrame;
import javax.swing.JLabel;
import javax.swing.JPanel;
import javax.swing.JRadioButton;
import javax.swing.JTextField;

public class Shapes23 implements Runnable {
    private JFrame  frame;

    @Override // java.lang.Runnable
    public void run() {
        showGui();
    }

    private JPanel createEighthRow() {
        JPanel eighthRow = new JPanel();
        URL url = getClass().getResource("paint-bursht.jpg");
        Icon ico = new ImageIcon(url);
        JLabel label = new JLabel(ico);
        eighthRow.add(label);
        return eighthRow;
    }

    private JPanel createFifthRow() {
        JPanel fifthRow = new JPanel();
        JTextField textField = new JTextField(20);
        fifthRow.add(textField);
        return fifthRow;
    }

    private JPanel createFirstRow() {
        JPanel firstRow = new JPanel();
        JLabel label = new JLabel("2D Shapes");
        firstRow.add(label);
        return firstRow;
    }

    private JPanel createFourthRow() {
        JPanel fourthRow = new JPanel();
        fourthRow.add(createRadioButton("Sphere"));
        fourthRow.add(createRadioButton("Cube"));
        fourthRow.add(createRadioButton("Cone"));
        fourthRow.add(createRadioButton("Cylinder"));
        fourthRow.add(createRadioButton("Torus"));
        return fourthRow;
    }

    private JPanel createMainPanel() {
        JPanel mainPanel = new JPanel();
        BoxLayout layout = new BoxLayout(mainPanel, BoxLayout.PAGE_AXIS);
        mainPanel.setLayout(layout);
        mainPanel.add(createFirstRow());
        mainPanel.add(createSecondRow());
        mainPanel.add(createThirdRow());
        mainPanel.add(createFourthRow());
        mainPanel.add(createFifthRow());
        mainPanel.add(createSixthRow());
        mainPanel.add(createSeventhRow());
        mainPanel.add(createEighthRow());
        return mainPanel;
    }

    private JRadioButton createRadioButton(String text) {
        JRadioButton radioButton = new JRadioButton(text);
        return radioButton;
    }

    private JPanel createSecondRow() {
        JPanel secondRow = new JPanel();
        secondRow.add(createRadioButton("Circle"));
        secondRow.add(createRadioButton("Rectangle"));
        secondRow.add(createRadioButton("Square"));
        secondRow.add(createRadioButton("Triangle"));
        return secondRow;
    }

    private JPanel createSeventhRow() {
        JPanel seventhRow = new JPanel();
        JButton button = new JButton("Enter");
        seventhRow.add(button);
        return seventhRow;
    }

    private JPanel createSixthRow() {
        JPanel sixthRow = new JPanel();
        JTextField textField = new JTextField(20);
        sixthRow.add(textField);
        return sixthRow;
    }

    private JPanel createThirdRow() {
        JPanel thirdRow = new JPanel();
        JLabel label = new JLabel("3D Shapes");
        thirdRow.add(label);
        return thirdRow;
    }

    private void showGui() {
        frame = new JFrame("Shape Image Generator");
        frame.setDefaultCloseOperation(EXIT_ON_CLOSE);
        frame.add(createMainPanel(), BorderLayout.CENTER);
        frame.pack();
        frame.setLocationByPlatform(true);
        frame.setVisible(true);
    }

    public static void main(String[] args) {
        EventQueue.invokeLater(new Shapes23());
    }
}

Here is a screen capture of how it looks. Note that I couldn't find the same icon as in your screen capture so I just used a different one.