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Not necessarily on center. Constant bearing but decreasing range will result in a collision.

Exactly! If the target was in the center, that would mean the missile was pointed to the target's current location. The target would quickly drift out of view!

Instead you want to intercept the target. You want to reach the point where the target will be, and at the same time as you. So keep the target to the side, at a constant angle.

Imaging missiles typically have the sensor mounted on a gimbal so the target can be centered in the image even when the missile body is not pointed at the target. But yes, the line-of-sight to the target will generally be off of the missile boresight.

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