I'm dubious about the space needed for expansion comment, race bikes have for a long time used bits of tubing instead of a reservoir and they get pretty hot.
You should always reset the level to max line when replacing brake pads, that way, as the pads wear, the level goes down, and if pad wear indicators are not fitted/working the reservoir level alarm should be an indicator that pads are worn, which is why you should never top up brake fluid mid pad life as it removes this feature. Also, if topped up mid pad life and then the pads are changed, pushing the pistons back in results in the fluid being pushed back to the reservoir, but there will now be more than the reservoir can hold and it will overflow unless drained off.