The gap under the top cap to the top of the steerer tube is your headset preload adjustment space is needed .

Your steerer tube is open out the bottom so moisture falls out.
perhaps an O ring to scrunch in tightening your headset .. It would be 1" ID , 9/8" OD . to lay in that gap on top of your steerer tube under the adjusting cap.

You can get neoprene foam pads that were made for Mountain Bike people worried about hitting their 'soft tissues' against the back of stem ,
in the process of going over the bars .

You won't have to see it, that gap that worries you, then.