Pre-Ragnarok, if your inventory was full, crafted items would fill a spot belonging to one of the items that went into making the new item.
Post-Ragnarok, what seems to happen is that the program searches for an empty inventory slot before destroying the ingredients, which means if you craft something with a full inventory, whatever you are crafting will fall to the floor. This is usually just annoying, but some items disappear when you drop them.
I am a little worried that I didn't write this clearly.