Most agree that the sides and front should be free as well. The big thing is to make sure it is "stress free", the whole action.

When bedding an action, I hear you are supposed to leave a space below the recoil lug, is this correct? and any other tips for this procedure?
Thanks

As Jim said, "It depends on the action".
Generally speaking, on those actions in which the front guard screw goes into the lug(Mauser, Sako, Springfield, Ruger, etc.), I go ahead and bed the bottom of the lug. On those actions which locate the front screw behind the lug (Remington, WinchesterM70, Savage, etc.), I provide clearance at front, sides, and bottom.
There have been some exceptions. For instance, the Sportco 44 screws the front screw into the (separate) recoil lug. I always had better luck with these clearing the lug and bedding an inch or so of the barrel.
Clearance on the sides of Winchester M70s seems unimportant as far as accuracy is concerned but makes assembly and diassembly much easier. Regards, Bill.

Depends on the action.