The highlight is really helpful to attract the attention of the user, you should make it longer or change it into a fading effect, but the idea is to call the attention to the row for more time, maximizing the chances of noticing the change on the table.
If the design of the table is as the one on the fiddle, I find a problem, I’m assuming that A, B and C will be some kind of heading for the columns. There should also be a heading for the remove row column and it would be better if there is some change in colour for that one since it’s not data but an action, which means that is a different category of information/interaction.
Finally, about your question, adding the new row on top, or as the first one, makes sense, no just because of the position of the button, but because it’s going to be close to the headings and where the user attention is most probably going to be. Although, if the table may be long enough, or if the user is going to be checking data along the table, the adding control is going to be too far, so when still a good one, you may consider adding a new control, for instance a floating one, with it’s explanation, of course. You may also consider repeating the headers section which improves usability and gives you a place to have the plus button.
If you repeat headings, and then have more addition buttons, whenever the user clicks on it and adds a new row, it should be inserted right below the control, like in your actual example.
If sorting is important, then after an insertion happens, you should also provide input to the user and a button to press and resort the data.