My Small NavMesh Characters are floating - how does the default BP_TopDownCharacter handle it?

I’ve got some custom characters about 30cm tall that are hovering above the Nav Mesh.

To try and debug it, I started up a new top down Unreal project, scaled down BP_TopDownCharacter to about 40cm, and made it use the NavMesh. I see there’s no floating on the character, but there is floating on the capsule collider. However, I do see that the character is not aligned with their capsule collider - their head is far down from the top, their feet stick out through the bottom:

If I look at the Blueprint Viewport though, I see that the feet are aligned with the bottom of the capsule collider, and there’s less margin above the head:

Is something pulling this character down in PIE to be aligned with the floor that is preventing floating?

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Note: I haven’t messed with the Navigation System parameters at all - haven’t setup a supported agent or changed the default Nav Agent Height in the BP_TopDownCharacter blueprint.