the gap.
Inside corners are flush cut to the exact length needed (to the wall), then the butting side is coped to match the outline.
Outside corners are mitred both sides and then slightly coped for the "Really Hard and Sharp" corner.
These details make all the difference in a job done well and a well done job.
Coping mean you cut the wood back from the edge on the back side. This allows the wood to be "jammed" in a bit and making it look really nice.
Coping is sort of like sharpening a piece of wood to the molding outline, though not at a very acute angle... prolly 70 vs 45 degrees.
And the gaps should never show up if properly done.