Making labels not overlap with other features

Question

I'm trying to generate a label for distances in a Layout i'm making. For this I am using a line feature and making a label with it's distance (a calculated field) I know that the simple solution would be to just export it to CAD and using the DIM commmand, but it'd prefer to do it in a GIS to keep as much information as possible.

The measurement labels (shown with a yellow buffer) I have right now overlap with the actual polygons that compose the figure I'm trying to show:

I'm trying to find a way to make it so that the labels will only show, or will try to show not overlapping other features. Looking around the labels options I found an option that says something that would seem like a solution, the Features act as obstacles option, but when I enable It nothing changes:

If there's any way of accomplishing this the way it is right now (or getting the distance of sides of polygons in general in QGIS)?

Answer 1

As commented by @John:

Go into your polygon layer label settings and in the drop down select blocking (instead of No labels and the other two options) and use the blocking options there.