From memory, the master cylinder has a hole drilled just forward of the rubber seal to allow residual fluid pressure to return to the reservoir when the brakes are released. When the pedal is initially pressed, a small amount of fluid may be ejected back into the reservoir until the hole becomes covered/passed by the rubber seal. This may be the small 'squirt' you can see.
The fully retracted position of the master cylinder piston/seal, and hence keeping the distance to the hole to a minimum, is controlled by the pre-set nose of the servo shaft.
The pre-set position can be adjusted with care BUT BEWARE:
Over adjustment will result in the brakes jamming on when the fluid temperature rises as the expanded volume cannot return to the reservoir when the pedal is released.
Post script. In my experience, early Range Rovers do not have the 'solid' pedal feel of later ABS types, even when bled correctly. Forty years of progress. 1972-2012
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