Looks like there's a lot of differing opinions and confusion. I'll add to it.
As I understand it, (and this may answer others' questions also) placement of the compression bung/star nut (carbon/alloy) should be in a position where the stem clamps around it fully, and not above or below it. This is more important with carbon steerers. The point being, if a stem is tightened to a carbon steerer, and it is overtightened, it can possibly crack and weaken the carbon steerer, so having the bung inside the steerer at the same position where the stem clamps around the steerer offers a stronger contact point as there is the diameter of the steerer AND the compression bung for the stem to sit around, and not just the carbon steerer. This is why people either move the position of the compression bung or buy a longer compression bung, so that it covers more length in the steerer.
Regards,
Salty seadog's question and in relation to
youngoldbloke's posted diagram above, different manufacturers say opposing things when it comes to spacers above/below the stem. I have always gone with the advice that, with a carbon steerer, there should be a small spacer ABOVE the stem and then the top cap is inserted and tightened, for the same reason as above, to not crack the fragile edge of the carbon steerer. The for's and against's and the I do's and I don't's are all over the internet.