Originally Posted by jadocs

No the top cap does not sit flush on top of the steerer. In the video you posted the guy is talking about compression plugs which have a lip that sits on top of the steerer. The cap needs 2-3mm of space to compress the headset to spec. He was just demonstrating how the compression fitting can expand the steerer. He just happened to have the top cap attached in the demo. If it were on the bike there would be 2-3mm of space in order to adjust the headset.