Seat height is dependent on riding position. You want to obtain the correct amount of leg extension for your inseam and you adjust the seat to the appropriate position. For instance, if you were to ride a 15" frame, you likely couldn't get the seat high enough to get the correct amount of leg extension. If you had a 21" frame, the seat would be quite low. This is relative to the top of the seat tube on the frame.
To find the correct leg extension, generally, when the ball of your foot is over the pedal spindle, and you're seated, and the pedal is at the bottom of the pedal circle, you should have slightly less than full lock. In other words, if 180 degrees is full leg lock,you want to be about 160-170 degrees or so. It's a bit of personal preference, but that's the rule of thumb. Most people are shocked at how high their seat is when set to be most efficient for pedalling. You certainly won't be able to flat-foot even one foot if it's set for the most efficient position for pedalling.
If you're a freeride or downhill goof (you know who you are!
) then the seat position is much more simply preference. Easier to get off the back, keep it out of the way...