You're Correct!

Standing closer to the golf ball results in you setting the shaft of the golf club more upright at address as there is a shorter distance between you and the golf ball.

Setting the shaft of the club more upright in its address position results in you making a more upright swing. A simple way of thinking about this would be if you had a hoola hoop and held it in your hands so that the bottom edge touched the floor where the golf ball would be. If you set your feet up very close to where the golf ball would be, the hoola hoop would be very upright.

Now slowly edge away from where the ball would be, still holding the top of the hoop and watch as it begins to lean towards you. This hoop is showing you the effect that where you stand has on your swing. The hoop represents your swing plane, or the angle that you swing the club head around you on. The further you stand away from the golf ball, the flatter your golf swing becomes. The nearer you stand to the golf ball the more upright your swing becomes.

If you take an alignment pole and then set up to a golf ball standing very close to it, you have to set the shaft of the golf club very upright, to fit the club in between yourself and the golf ball. If you push an alignment pole into the ground to reflect the angle that the shaft is set at in the address position, this is the angle that the club head should swing around you at. If you move further away from the ball with your stance, you have more room available between yourself and the golf ball and so you can set the shaft of the golf club at a lower, flatter angle.

Standing closer to the golf ball produces a more upright swing, not a flatter swing, as there is less available room between yourself and the golf ball to set the club into. As a result you have to set a steep angle with the shaft of the golf club as you address the golf ball and this now requires you to make a steeper golf swing to return the golf club back to the ball.

The distance that you stand from the golf ball is absolutely crucial for setting the correct plane for you to swing the golf club on. Swinging the golf club on the correct plane results in you returning the club head back to impact much more correctly and consistently. If you stand too close to the ball, your posture will become more upright and you will use your arms to lift the club up too much on your back swing. Standing too far away results in you bending forward too much and stretching your arms out away from your body to "reach" the golf ball. You will be very off balance swinging from this position and make a very flat back swing as a result. It is crucial to stand the correct distance from the ball.

It would be inadvisable to stand nearer to the golf ball and over flex your knees as you would feel you would have no room to make a proper swing. Bending your knees would have little effect on your swing plane.