Penny in a jar is not the same scenario. Because the volume of the penny, and the volume of the water inside the jar....do NOT change when you flip the jar around.
With a hydraulic cylinder, as you compress it and force the rod into the body of the cylinder.....volumes change. So instead of a penny in a jar, a better comparison would be to cut a hole in the lid of the jar, and get a ~1.5" wooden dowel rod. This dowel rod represents our piston rod.
Now put the rod in the jar and fill the jar clear full with water. Pull the rod out.....and you will notice the water level went down right? Now if this rod where tightly sealed to the jar....that air space would be vacuum. This is what happens when a bucket or toplink drift (extension)
Now take that same jar, and fill it clear full without the rod in there. Once clear full, shove the rod in there. What happens to the water? It overflows right? The EXACT same thing has to happen inside a cylinder. In order to compress a cylinder (shove the rod down inside there), the oil that gets displaced HAS to go somewhere. The only place it can go is either back through the control valve, or all over the ground via a leaky hose/fitting.