The proper vertical positioning for the toilet flange is on top of the finished floor.
Think about this from the perspective of the toilet manufacturer. Their goal is to minimize any leakage from the toilet (either gas or liquid) by having a minimal distance between the toilet flange and the toilet “horn” (the projection from the underside of the toilet visible in SeniorSitizen’s post). The toilet flange is secured to the floor, and the toilet is held down by bolts between the flange and the toilet, but there is a gap between the two which is sealed by the wax ring, or alternative.
The toilet manufacturer has only two choices – assume that the flange is flush with the finish surface or sitting on top of the finish surface. They cannot design the toilet to have a minimal distance between the horn and a flange mounted on the subfloor because every installation will have a different height difference between subfloor and finish floor.
The toilet manufacturer can design for the flange being flush with the finish floor or sitting on top of it. In either case they know what the height of the flange will be relative to the base of the toilet, which will be sitting on the finished floor. If they designed the horn to have minimal distance to a flange flush with the floor, though, the toilet would not sit properly when the flange was mounted on top of the floor. Instead of the perimeter of the toilet base sitting on the finished floor, the horn would be sitting up on the flange, and the toilet would be rocking back and forth.
So, toilet manufacturers design their products to work with the toilet flange mounted on top of the finish floor requiring a standard wax ring to fill the minimal space between toilet horn and toilet flange. Installing the flange lower, either flush with the finish floor or even lower on the subfloor will make for a bigger gap between toilet horn and flange. That might still work with a standard wax ring, or it might require something designed to fill the bigger gap. The thing is, you can’t see if the gap is properly sealed, so installing the flange on top of the finish floor gives the best odds of a successful installation by making the gap between flange and horn as small as possible.