When you sit on the bike the fork should be adjusted to that the rider weight causes about 20mm of compression, yes the fork is supposed to move or be loose as you put it.
This is because the wheel needs to be able to move in both directions, both up and down when at the end of an obstacle or pothole, it allows a smoother landing and better trail grip because it is in contact with the ground a higher % of the time.
For someone who hasn't had a properly adjusted front suspension I can see how it might seem too loose, but think about a car suspension, the car sits on springs that are under tension in the middle of their travel, not with springs fully extended as tall as they can go when sitting still.
