I've always had my plates pretty close to other corals, and as long as they aren't directly touching, things work out. It is normal to puff up like that, and is actually healthy from what I've seen. The only plates I've had that didn't make it never displayed this puffing behavior at night. My favorite plate will get huge nearly tripling in height every night putting out tentacles, in the day it almost looks like a skeleton compared to the night look.