The common argument for raising the blade is that the front of the blade is making a more downward cut, theoretically reducing the chance of kickback and increasing cut quality. While this may produce a better-quality cut in plywood, the kickback argument relies on flawed logic, since kickback is often produced by the kerf pinching the back of the blade or by a workpiece or offcut getting pinched between the back of the blade and the fence. It also means the back of the blade is following a more vertical path as it exits the table, increasing the possibility that your workpiece or offcut will be raised off the surface of the table and out of your control.
The argument for lowering the blade is that less exposed blade means you have a smaller chance of an amputation if you accidentally position your hand in the line of the cut and make contact with the blade.
There are various modern recommendations, all of which are very similar:
- the blade should be raised so its peak is 1/8" to 3/8" higher than your workpiece
- the blade should be raised so 1 full tooth is exposed above your workpiece
- the blade should be raised to expose half of the gullet (if there are multiple depths of gullets as in some combination blades, this recommendation applies to the shallowest gullets)
As TX Turner briefly noted, the purpose of having some clearance above the blade is to allow the gullets to empty. If the gullet does not have adequate clearance, it may not be able to dump its payload before its corresponding tooth takes another bite. When this happens, the gullet becomes packed with sawdust, producing friction on each subsequent pass, commonly causing the blade to wander and/or burn the wood.