8.3.1 Collapsing margins
In this specification, the expression collapsing margins means that adjoining margins (no non-empty content, padding or border areas or clearance separate them) of two or more boxes (which may be next to one another or nested) combine to form a single margin.

In CSS 2.1, horizontal margins never collapse.

Vertical margins may collapse between certain boxes:

Two or more adjoining vertical margins of block boxes in the normal flow collapse. The resulting margin width is the maximum of the adjoining margin widths. In the case of negative margins, the maximum of the absolute values of the negative adjoining margins is deducted from the maximum of the positive adjoining margins. If there are no positive margins, the absolute maximum of the negative adjoining margins is deducted from zero. Note. Adjoining boxes may be generated by elements that are not related as siblings or ancestors.
Vertical margins between a floated box and any other box do not collapse (not even between a float and its in-flow children).
Vertical margins of elements with 'overflow' other than 'visible' do not collapse with their in-flow children.
Margins of absolutely positioned boxes do not collapse (not even with their in-flow children).
Margins of inline-block elements do not collapse (not even with their in-flow children).
If the top and bottom margins of a box are adjoining, then it is possible for margins to collapse through it. In this case, the position of the element depends on its relationship with the other elements whose margins are being collapsed.
If the element's margins are collapsed with its parent's top margin, the top border edge of the box is defined to be the same as the parent's.
Otherwise, either the element's parent is not taking part in the margin collapsing, or only the parent's bottom margin is involved. The position of the element's top border edge is the same as it would have been if the element had a non-zero top border.
An element that has had clearance applied to it never collapses its top margin with its parent block's bottom margin.

Note that the positions of elements that have been collapsed through have no effect on the positions of the other elements with whose margins they are being collapsed; the top border edge position is only required for laying out descendants of these elements.

Margins of the root element's box do not collapse.
The bottom margin of an in-flow block-level element is always adjoining to the top margin of its next in-flow block-level sibling, unless that sibling has clearance.

The top margin of an in-flow block-level element is adjoining to its first in-flow block-level child's top margin if the element has no top border, no top padding, and the child has no clearance.

The bottom margin of an in-flow block-level element with a 'height' of 'auto' and 'min-height' less than the element's used height and 'max-height' greater than the element's used height is adjoining to its last in-flow block-level child's bottom margin if the element has no bottom padding or border.

An element's own margins are adjoining if the 'min-height' property is zero, and it has neither top or bottom borders nor top or bottom padding, and it has a 'height' of either 0 or 'auto', and it does not contain a line box, and all of its in-flow children's margins (if any) are adjoining.

When an element's own margins collapse, and that element has had clearance applied to it, its top margin collapses with the adjoining margins of subsequent siblings but that resulting margin does not collapse with the bottom margin of the parent block.

Collapsing is based on the used value of 'padding', 'margin', and 'border' (i.e., after resolving any percentages). The collapsed margin is calculated over the used value of the various margins.

Please consult the examples of margin, padding, and borders for an illustration of collapsed margins.

For others who experience this (as a) problem, but want to play freely
with margins of _some size_ on paragraphs and other elements:

The 'protruding margins' / 'collapsing margins' (same thing) are better
sorted out by applying a 'margin-top: 1px;' on body. A negative
margin-top the same size, will cover up any unwanted offset created by
such a small padding if _that_ becomes a problem.

IE/win doesn't show the mentioned "gap", because body is given 'Layout
by default'[1] in that browser. That's the buggy part of 'Layout'. IE
may show such "gaps" on other elements that doesn't have / isn't given
'Layout'.

This non-standard 'engine-inherent rendering concept' effect in IE
points back to the fact that 'collapsing margins'[2] are contained in
the outer container - in this case body - _if_ the outer container is
styled to establish a 'block formatting contexts'[3] (which is the
closest thing to 'Layout' in standard CSS). Studying those two
parts of the CSS specs, should make it perfectly clear what's happening
and what can be done about it.

Applying such a 'block formatting contexts' style on body isn't always
working too well in all browsers, but applying it on the next main
container inside body - usually a wrapper-div in most layouts - will
have the same effect.