Almost everywhere I've seen, they're tied on the bottom edge (i.e., the side where the decorative fringes are).
Yet according to the halacha, tzitzis need to hang in such a way that they are notef al hakeren. In the case of a tallis gadol, this means tying them the way it is usually tied because when you wear it, it ends up hanging in such a way that they hang down the corner. In other words, the "bottom" of a tallis gadol is not the "bottom" when it is worn.
In the case of the tallis katan, however, we never flip it onto the shoulders or wear it in such a way that having it tied on the bottom will allow it to hang in a way that it hangs down the corner -- it would have to be tied sideways for this to happen. Why is this not the case?