I am replacing a fence post that was in a circular 2-ft form. The old one had rotted where the concrete and post meet at the top - the next one will have the concrete above water level! But - I noticed that the old post was sticking out of the concrete on the bottom. I this a bad thing in that water can seep up into the post from below? Or is it a good thing in that water that does seep through the top can leak out the bottom?
Concerete around a fence post is to help with lateral stability. It's not being used as a footer, since there isn't a whole lot of weight involved with a fence post.
As such, there's no need for concrete to be below the bottom of the post...in fact, you like don't want that, as you want any water that gets between the concrete and wood to have a place to drain.
What I'd suggest doing is to use gravel at the bottom...tamp it down with the post, set the post vertical, then add a bit more gravel and tamp down to 'set' the post. Then you can apply concrete around that, above the ground and then slope the top away from the post to help shed water.
Depending on your soil type, you may not even need concrete--you could actually just use gravel all the way to the top, tamping as you go.
STOP!!!! The correct way to prevent rot coming up the post is to set the tube, pour a little bit of concrete to the bottom, lift the tube a few inches allowing the concrete to "mushroom" out around the bottom of the tube, then set the post and pour the rest of your concrete. Do not allow the post to go through the bottom of the concrete. Water will wick up the post and rot it right inside the concrete. The bottom wants to be fully encased in concrete. Also taper the top of the concrete around the post so no water sits against the post. Simply use a trowel to shape the concrete as it cures into a nice shallow grade/cone so the water runs off.