The stat should be the same or almost the same length as the element, its then measuring the average temperature of the water in the cylinder. When starting with a fully cold cylinder then the stat will shut off the power when all the vol of water that the element is immersed in is heated to the set point, say 60C. On drawing off HW, the stat will then switch on the power well before that whole vol of water is drawn off, so some of the top vol of water can still be at 60C and will heat up further when the power is restored, that should'nt (in theory) cause the o/temp contacts to open (in the stat that has combined control & O/temp) but it may. I think most new immersions have this type of stat now but quite a lot of cylinders still have a separate O/temp stat bolted to the top of the immersion which could trip as they only measure the temperature of the very top vol of water.
I did come across a cylinder one time where the HW take off the top was dipping down into the cylinder by about 4 ins or so, creating a air lock and causing all sorts of problems until rectified.
As suggested in post #13. just turn down the stat by say 5C, might stop that nuisance tripping.
Also, as above, try and measure the HW temperature after a reheat.