1991 MK2 Jetta Shock Absorber Installation.....Front Shocks
New shocks were installed in 1999 by a local shop......I didn't notice this condition until today !!!!
This photo shows the top of the shock tower with the tire resting on the ground. The top of the flange(?) is raised above the tower.

In this photo the tire is suspended off of the ground and the shock assembly is basically hanging by the flange(?). I can then pull up on the tire and lift the flange somewhat off of the tower....so it's kind of loose and I can move it up and down in a vertical direction.

So, the body is just sitting on the rubber isolator when the car is resting on the pavement.
Is this suppose to be like this?

? It's just that I have never noticed and wonder if the wrong size shock were installed !!!!??? It hasn't presented and problems of which I am aware. My attitude is leave well enough alone, but I am curious about this.
That is completely normal and exactly how it is supposed to be. This question pops up all the time in VW forums.
Is the strut bearing upside down?
So, the body is just sitting on the rubber isolator when the car is resting on the pavement.
Yes. The strut top is secured to the chassis using only earth's gravitational field. I've always thought this design was a total cheapskate engineering solution on VW's part but that's the way it is.
Strange as it is, the only time the body's weight isn't resting on the strut bearing is when the vehicle is lifted or flying. Thankfully neither situation happens during normal driving. ;-)