It is normal for the seatpost to compress up to 5 mm when seated.
For Reverb Stealth C1 posts: The Vent Valve should be used ONLY if the seatpost compresses more than 5 mm during normal use in the fully extended position while seated. Do NOT use the Vent Valve if the seatpost is compressed. The Vent Valve is NOT to be used regularly and is only to be used if the seatpost compresses abnormally while seated.
More information can be found in the Reverb User Manual here.