How to apply shadow to interior views in SwiftUI?

You can use clipped() here to fix this

VStack() {
    Text("Text")
        .background(Color.red)
        .padding()
        .padding()

    Text("Text")
        .background(Color.purple)
        .padding()
}
.padding()
.background(Color.white)

.clipped()
.shadow(color: Color.red, radius: 10, x: 0, y: 0)

Output:

Hope it is helpful :)

For me it also worked to apply the shadow to the background instead of the Stack, e.g:

VStack {
  // ...
}.background(Rectangle().fill(Color.white).shadow(radius: 8))

There is a dedicated modifier for this - compositingGroup.

From documentation:

/// Wraps this view in a compositing group.
///
/// A compositing group makes compositing effects in this view's ancestor
/// views, such as opacity and the blend mode, take effect before this view
/// is rendered.
/// [...] 
/// This limits the scope of [...] change to the outermost view.

VStack {
    Text("Text")
        .background(Color.red)
        .padding()
        .padding()
    Text("Text")
        .background(Color.purple)
        .padding()
}
.padding()
.background(Color.white)
.compositingGroup()
.shadow(color: Color.red, radius: 10, x: 0, y: 0)