According to R. Shimeon b. Eliezer (tractate Mezuzah) one must leave a gap of at least one line width on every side of the text of the mezuzah. As well as the obvious aesthetic value, this is to ensure that the ascenders (e.g. the top of a lamed) and descenders (e.g. the foot of a final tsadi) are completely surrounded by parchment (mukaf g'vil) or it would be invalid.