From the orientation in the photograph, there are two skirts visible. The larger diameter outside skirt sits in the slight depression that you speak of, while also going up inside the top cover. The top cover also serves as the mount for the hose which goes out to the top of the radiator. The smaller diameter inside skirt sits inside the lower mount. This smaller diameter skirt descends further into the lower mount when the operating temperature is reached, to block off the water passage to the short hose which short circuits the water back the the water pump, by-passing the radiator. Without this proper thermostat, there is no restriction to force the water to travel throught the radiator, instead of simply going directly back to the water pump.
Aaron.



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