illustration of a peculiarity of TeX paragraph building

figure.tex

\documentclass{article}

\usepackage{mwe}
\begin{document}

% or anything filling the line with less than inter-word space shrinkability
\noindent\rule{\linewidth}{1pt} % <-- we deliberately leave a space token here
\begin{figure}[htbp]
  \centering
  % only by way of example, close to real life examples
  \includegraphics[height=1cm]{example-image-a}
  \caption{Hello, is there extra space above figure env?}
\end{figure}

\noindent\rule{\linewidth}{1pt}

\begin{figure}[htbp]
  \centering
  \includegraphics[height=1cm]{example-image-a}
  \caption{This one doesn't have any...}
\end{figure}
\end{document}

\ifhmode\unskip\fi is exactly what bsphack does so no need to hack that in!

about bsphack/esphack I was probably meaning: as bsphack does \ifhmode\unskip\fi already perhaps a modified esphack would handle that problem. But I admit I do not have examined in detail why there is still the problem even with \end{figure}\par ... (many edits)....

Arrrgh.. you fooled me ;-) no that's not true, \@bpshack does NOT do \unskip. There is only an \ignorespaces in \@esphack rather...

\def\@bsphack{%
  \relax
  \ifhmode
    \@savsk\lastskip
    \@savsf\spacefactor
  \fi}

(edited)

as proof of concept, I hacked this version

\def\@bsphack{%
  \relax
  \ifhmode
    \@savsk\lastskip
    \@savsf\spacefactor
    \unskip % ADDED
  \fi}
\def\@esphack{%
  \relax
  \ifhmode
    \spacefactor\@savsf
    \ifdim\@savsk>\z@
      \hskip\@savsk % ADDED
      \ifdim\lastskip=\z@
        \nobreak \hskip\z@skip
      \fi
      \ignorespaces
    \fi
  \fi}%

It surely has issues, but with this, the problem of this gist with figure goes away.

But, anyhow I do not at all advocate this, not only because I have not tried to analyse consequences in general, but mainly from my earlier comment about what end user should do.

well true but anyway adding an extra unskip would break the intention of bsphack, that's what I meant. bspack/espack is supposed to leave a space if there is a space before or a space after, it would probably have been better if it removed the space from the start and re-inserted at the end but a bit scary to change that now it's been the way it is since the dawn of time, and in your case with a figure at the end of a paragraph it wouldn't help as you'd still end up with two spaces (perhaps, depending on details of unwritten code)

\hskip@savsk % ADDED
\ifdim\lastskip=\z@

for example can't be right as written as the test will never be true (that's probably fixable but this is a very delicate area, and early on in 2e we tried several variants all broke something)

@davidcarlisle Yes of course, the \ifdim will never be true, I just dropped the extra line in for checking it worked in my use case, I should I have put it after but didn't like the \nobreak, and didn't think twice

about figure at end of paragraph, the \ignorespaces it still there. It does make the issue go away in my testing. the ignorespaces is not relevant here. It works without it. (see next comment)

for example with

AAAAAAAA  AAAAAAAA  AAAAAAAA  AAAAAAAA  AAAAAAAA IIII.
\begin{figure}[htbp]
  \centering
  x
  \caption{Hello, is there extra space above figure env?}
\end{figure} {} {}

and the modified sphack, there is no issue.