You can do it either way. There is no real standard when running base fillers full height or holding them above the toe kick area.

Historically, I would have the filler run full height, as I think it looks cleaner and gives the base molding a nice flat surface to die into.

However, there are a few drawbacks. The filler becomes permanent, or nearly impossible to remove once the countertops are installed. The portion of the filler that touches the floor can get banged up during cleaning, and it may not sit tight to the floor if the floor is out of level.

Alternatively, holding the filler up 4″ allows the toe kick skin to continue behind that area. This approach is easier to clean and less likely to show damage over time. If damage does occur, you can simply replace the toe kick skin piece.

This method has become more common in recent years, and it is the approach we generally recommend now since it tends to hold up better over time.