The rain gauge is calibrated to the size of the hole, and has a standard capacity (in gallons). The actual amount of water in the bucket is determined by the size of the hole, the size of the bucket, and the number of drops hitting the bottom of the bucket.
The amount of rain recorded by a rain gauge depends on the size of the gauge, the depth to which it is inserted into the ground and the height above the ground at which it is placed. If the rain gauge is installed at the same height as the gutter, or just below the surface of the soil, it will collect most of the rain that falls in the area.