Like a water-oil contact it is often a short transition rather than a knife edge, controlled by capillary pressure between gas and oil. It is a true vertical depth.
Producing too close to it, or at too high a rate, lets gas cone down to the perforations and lifts the producing gas-oil ratio. A contact that moves down over time is evidence that the gas cap is expanding or that oil is being pushed into it. A contact picked in measured depth in a deviated well will be in the wrong place on the map.