Yea, that’s an engine thing when your working with specific bound types (like box, cylinder, convex hull etc), it seems to be a collision buffer or something.
Either way, it’s not something you would notice in a 3D view, and a fully textured environment. The separation is so minimal, that it’s only noticable when your looking at it in absolute 2D level ortho.
I think the reason it was so obvious in his setup was because he set his scene on such a very small scale. That in turn made that “buffer space” seem huge, when actually the scene was far too small. Now I know that scale should be a non issue when talking about 3D space, but it seems to play a big part in how the bullet engine handles it.
Keep in mind that the BGE + Bullet engine mix is actually pretty young. I mean this thing was implemented something like 2 or 3 versions ago, it’s a constant work in progress, so expect to find a fair share of bugs.
That said this issue is not really all that critical. There are many other bugs that warrant attention from the devs, such as the scene switch memory leak bug. I hope they get around to fixing that in the upcoming release.