I'm not a blacksmith but that sure sounds like better advice than the
knuckles height. I would have guessed that you want it 3" to 4" lower
than your elbow when used with a 2-1/2pound hammer.

Yep. And what most people don't realize is the knuckle height advice that
is passed along is for an anvil that will be used with strikers. As in
people using what looks like a sledge hammer with about a 3' handle on it.
Set it for that height and use a normal 2 or 3 pound hammer and you are
going to be hunched over your anvil. Not good for your back.

I set my anvil so my hammer face is parallel to the anvil face with my
elbow directly below my shoulder and my forearm about parallel to the
ground. My back is straight. This way I hit with the most power without
pulling my body out of line or having to bend over.