Yep, top of the 12th fret to the underside of the string.
I think you’re underestimating how lightly some people play, and that, as previously discussed, some of us like a sound that incorporates a little buzz (but not clank). I both fret and pluck very, very, very lightly. 2 of my 3 current basses have just had a fretstone and have been set at 2mm 12th E, roughly 1mm 12th fret G, but I may drop the E side a hair.
I’ll add that I usually play with a pick in a very guitaristic manner, but I wouldn’t want the action any higher when playing with fingers.
Personally I struggle to understand how anyone can play most of the basses I play in shops, I can barely even fret most of them.