That thing is called the steering tube. In the picture to the right, you'll see what I'm talking about. At the top of the stem, there are about 4cm of black spacers.

Most manufacturers cut the steering tubes flush when the bike is assembled. This causes problems if you want to raise your handle bars. On modern bikes, you need a long steering tube if you want to raise your handle bars. We leave all of the Rodriguez bikes about 2 to 4 centimeters longer than your fit calls for just incase you want to tweak the fit after you ride the bike a bit. Once your fit is dialed in perfectly, you can have the excess steering tube cut off level with the top of the stem.

When customers come to us with a bike that has the steering tube cut down already, we have to install an adapter on top of the existing steering tube if we need to raise their bars. This adds cost, weight, and doesn't look nearly as good as if the steering tube is the right size.

Bike shops are used to seeing them cut flush, so once in a while even another bike shop will comment to a Rodriguez customer that the steering tube needs to be cut down.

The only reason to cut it down is so the bike will look finished, and the bike's not finished until you're happy with the way it fits.