there is about a 2-3mm window of correctness - outside of this and the saddle is at the wrong height.
Start by sitting on the saddle with your heel on the pedal and your leg should be just about completely straight. By the time you ride with the ball of your foot on the pedal you should be in a good position, however, you might want to drop 1-3mm from this position. And remember that unless you use exactly the same shoes for cycling, different sole thickness with have an effect, as will padded shorts.
Altering the fore/aft position of the saddle or its angle will slightly change the feel of the saddle position and the distance from saddle to pedal too.