Adult bike sizes are normally measured from the top of the seat tube (where the seat post fits into the frame) down to the centre of the bottom bracket axle (the axle which carries the pedal cranks).
With the correct frame size you should be able to sit on the saddle with your feet on tip-toes touching the ground on either side, and you must be able to reach the handlebars comfortably.
It is sometimes worth considering a smaller frame with the saddle raised slightly in order to obtain a more comfortable reach. This is also true if you are an inexperienced/nervous cyclist or have mobility issues.
Here are a couple of size charts as well to give you a rough idea:
