I asked customer service at ToolsToday after that bit broke inside the collet. They forwarded my question to Amana which replied “The tool was set up incorrectly”. I had inserted the bit too far into the collet, because the “K” mark was inside the collet.
So I think the answer to your question is that is not a minimum insertion point, it is a maximum insertion point. Which is not what I expected, not that my amateur-expectation means anything.
It could also be a bad response, I just wanted to share the knowledge that there is a mark which apparently indicates where Amana wants the tool to transition into the collet. That knowledge base you linked seems to directly contradict the message I received so it appears I might be wasting everyones time here.
Measure your collet length and that length is your minimum insertion. The collet gets maximum grip that way. However do not bottom out a bit in the router shaft. Bottoming out can cause vibration and runout issues, plus the router bit moves up slightly when tightening router bit.