Using the stand gets the GPS up and father away from RF Interference. It will help it connect to more satellites sooner.
I noticed on my GPS on my plane that it would also connect better if I powered it up first. Wait a min or so then power up my FPV equipment.
Still 1 to 2 inches will work.
And if you want to protect the GPS more, you can use one of the
Protective Adjustable Mount for DJI NAZA GPS Receiver
Always make sure you have it pointed in the right direction, and enter how many inches/mm it is from the center of the MultiRotor in the naza assistant software for it to be more more accurate.
I have got to get mine mounted on my Hexa... But busy with the QAV right now so it can wait..
Here is a little video help on setting the GPS up... hope this helps...
DJI Naza-M GPS Mounting, Setup & Calibration