for a threadless headset to work properly, the outside races of the bearings must be one with the headtube and the inside races of the bearings must be one with the steerer tube. additionally, there must be no vertical play. most headsets need a something to serve as an intermediary between the stem and and the inner race to remove excess play. this is the purpose of what's called a compression ring. IME and HO.

there's nothing to say i'm not full of it though.