This is follow up to a question I posted before about not using caulk when installing cedar lap siding.

When not using caulk and trying to minimize rainwater infiltration to the WRB can cedar siding be pressed tight against window casings, corner boards, etc. or is a ~1/16″ gap necessary for lateral expansion/contraction? (I’m in Minnesota with a sizable temperature and humidity range)
I neither want to add a batten nor route out the window casements. I will just be butting the siding into any exterior trim. I did create a 1/4″ drainage plane behind the siding.

On a related note I’m using D&Btr cedar. The knots that some of the wood has are nickel sized and crusty black around the edges of the knot. Some have already popped out. Can I use two part wood filler to lock in knots or replace the knots that have fallen out? Or are these knots inevitably going to fail in the outside conditions?

Thanks