Hello, TS team. I bet this is easy one for you. And I 95% sure it's not a bug (then what?). The code is not entirely mine, but still I wonder why it fails to compile and why TS doesn't break down the error as it usually does.

TypeScript Version: 3.3.0-dev.20181207 (3.1.6 gives the same result, as does the current playground)

Search Terms: "Type x is not assignable to {conditional return type y}"

Code

const fn = <D extends string | undefined>(someParam: string, defaultValue?: D) : D extends undefined ? string | undefined : string => {

  const result = '';

  return result;
}

Expected behavior:
To compile or at least to break down the error.

Actual behavior:
Fails and shows a not very useful error "Type '""' is not assignable to type 'D extends undefined ? string : string'."

Playground Link:
the playground

Is it at all OK to use a conditional type as a return type? Am I missing something?

P.S. This problem came from stackoverflow, I've tried to answer.