I share your confusion! I think 'contact' and correct hand position are very difficult things to teach (and to learn!). I know a good, 'elastic' contact when I see it in other riders, but I couldn't really put into words what these riders are doing. All I know is that it just looks 'right', and I can imagine how it must feel (but can't seem to actually achieve this with my own horse most of the time.
I seem to do a lot of fiddling with reins, and adjusting my hand/arm position, without getting the desired result... I also find it difficult to hold the reins firmly, without tensing up my arms and shoulders.
I don't know if it is something which comes with experience (ie you learn to feel what is right), or whether it is one of those things that some people never quite master. From watching the international showjumpers at the Belfast Show on Sunday, there seems to be a huge variation in hand position. A lot of them have a nice elastic, steady contact, but some seem to have quite rigid, inflexible hands.....