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Thanks for tackling this! It's nice to roundout the stack rules! It mostly appears to be working exactly as it should, and a group block is a good way to test it. In the following GIF I've commented out a few extra rules I added in my own theme to complement it, but it works as it should:

Two things, though. On the frontend, I'm seeing this rule correctly output:

.wp-site-blocks > * + * {
    margin-top: var( --wp--style--block-gap );
    margin-bottom: 0;
}

However I'm not seeing a similar rule for the first child. I would assume it to be something like this:

.wp-site-blocks * {
    margin-top: 0;
    margin-bottom: 0;
}

In my theme, that would've targetted the header. But it doesn't seem to be there.

The other thing, the rule appears to be output for the page title in the editor:

causing it to collapse quite a bit:

That last bit is not a problem, it's something I can fix in an editor style if need be. But judging by the code changes it doesn't seem to have been intentional?

yeah I forgot the root level, what about now?

Worth noting, I'm not seeing the title margin cancelled out on either Empty Theme or TT1 blocks:

I haven't yet tested TwentyTwentyTwo — how does the title block look there for you?

@jasmussen It does impact the post title, that's actually the result of applying the default layout to the post title wrapper. We do this in order to apply the right "max-width" to the post title.

I'm not exactly sure how to solve that at the moment but let me try a few things

I'm personally okay with the trade-off because it isn't really a "block" yet, and it's one of those things that would be solved if it actually became a block.

The reason I mention it is because right now it behaves add it's own wrapper with a single child, followed by the post content wrapper with all it's paragraphs. Meaning there's no gap between title and post content.

Maybe a better default would be to explicitly apply the "gap" variable as a margin-top and margin-bottom of the wrapper? (I mean hard-coded in Gutenberg codebase. WDYT

If the gap is leveraged by the theme, yeah that might make sense. Basically I would ideally expect the editor (post title and a bunch of paragraphs) to look the same as a H1 followed by a bunch of paragraphs on the frontend.

I pushed a fix let me know how it feels.