I've separated this because it's important. There should be no steerer tube protruding above the stem or spacers. Rather, it should be cut so that it is slightly below the top of the spacer or stem. This is so the cap will fit down, and then when the cap bolt is tightened, the whole assembly will be tightened, and thus put preload on the headset bearings.

If you have the steerer tube protruding, the cap won't be able to pull down on anything except the tube, leaving you with loose and very clunky stem and headset bearings.