There should be a small gap at the 8th fret when the 1st and 14-17th are fretted. Enough to see a small gap between the string and the fret. I believe its around .1/128" or 0.010 inches with a feeler gauge. I generally judge by tapping the string and then adjust slightly based off of fret buzz. If there is no gap or the gap is quite pronounced, the truss rod needs adjustment. Generally speaking a flatter neck or even a neck with a back bow will buzz on the lower frets, and a neck with more relief would buzz more in the middle of the neck. Yes, you are correct. That does NOT address fret dressing/leveling issues and other disappointments / nightmares with dried out fretboards causing raised fret edges. Leveling can compensate for a slightly warped neck.