Why I can't see this image when I set position to relative?

Question

I've been playing around with z-index to create kind of a crystal effect as you can see, thing is that, If I want the background of the header to be visible I need to set his position to absolute but I don't know why. That background image is relative to the .center_form--header class and since I used z-index it should get all the back space to display doesn't it?

Anyone knows what's happening or can tell me how is this supposed to work?

form {
  position: relative;
  margin: 0%;
  padding: 0%;
  position: relative;
  width: 100%;
  height: auto;
  display: inline-block;
  background: #f4f7f8;
  border-radius: 0 0 20px 20px;
}

.center_form {
  position: relative;
  width: 50%;
  display: inline-block;
  height: auto;
  text-align: center;
  border-radius: 20px 20px 20px 20px;
  -moz-box-shadow: 1px 1px 15px 1px black;
  -webkit-box-shadow: 1px 1px 15px 1px black;
  box-shadow: 1px 1px 15px 1px black;
}

.center_form--header {
  position: relative;
  border-radius: 20px 20px 0 0;
  height: auto;
  z-index: 5;
}

#formtitlebg {
  position: absolute;
  width: 100%;
  height: 100%;
  background-image: url(https://i.postimg.cc/bw0JjXgn/8-bit-game-wallpaper-42148.jpg);
  background-repeat: no-repeat;
  background-position: center;
  border-radius: 20px 20px 0 0;
  filter: blur(2px);
  -webkit-filter: blur(2px);
  z-index: -5;
}

#formtitle {
  position: relative;
  display: inline-block;
  width: 100%;
  margin: 0;
  padding-top: 2%;
  padding-bottom: 2%;
  border-radius: 20px 20px 0 0;
  text-transform: uppercase;
  font-family: 'Press Start 2P', cursive;
  font-size: 15px;
  text-align: center;
  color: white;
  background-color: rgb(0, 0, 0);
  background-color: rgba(0, 0, 0, 0.4);
}

.center_form--elements input[type="text"] {
  position: relative;
  width: 90%;
  height: 10%;
  margin-top: 2%;
  margin-left: 3%;
  display: block;
  border: none;
  outline: none;
  border-bottom: 1px solid #ddd;
  background: #f4f7f8;
  font-size: 18px;
  margin-right: auto;
}

.center_form--elements input[type="submit"] {
  position: relative;
  margin-top: 3%;
  margin-bottom: 3%;
  -moz-box-shadow: 1px 1px 15px 1px black;
  -webkit-box-shadow: 1px 1px 15px 1px black;
  box-shadow: 1px 1px 15px 1px black;
  background-color: #1A1D1E;
  border: 1px solid #1A1D1E;
  display: inline-block;
  cursor: pointer;
  color: #FFFFFF;
  font-family: 'Open Sans Condensed', sans-serif;
  font-size: 14px;
  padding: 1% 5%;
  text-decoration: none;
  text-transform: uppercase;
}

<div class="center_form">
  <div class="center_form--header">
    <div id="formtitlebg"></div>
    <h2 id="formtitle">Press start!</h2>
  </div>
  <form>
    <div class="center_form--elements">
      <input placeholder="Name" type="text">
      <input placeholder="Email" type="text">
      <input type="submit" value="START">
    </div>
  </form>
</div>

Answer 1

You need to move background to the header instead of cropping it. Besides for header background you can use :before pseudo class. In my example you can see that I removed position absolute from your css, and code became clean:

Try like this:

form {
    position: relative;
    margin: 0%;
    padding: 0%;
    position: relative;
    width: 100%;
    height: auto;
    display: inline-block;
    background: #f4f7f8;
    border-radius: 0 0 20px 20px;
}

.center_form {
    position: relative;
    width: 50%;
    display: inline-block;
    height: auto;
    text-align: center;
    border-radius: 20px 20px 20px 20px;
    -moz-box-shadow: 1px 1px 15px 1px black;
    -webkit-box-shadow: 1px 1px 15px 1px black;
    box-shadow: 1px 1px 15px 1px black;
}

.center_form--header {
    position: relative;
    border-radius: 20px 20px 0 0;
    height: auto;
    text-align: center;
    color: white;
    padding-bottom: 2%;
    padding-top: 2%;
    border-radius: 20px 20px 0 0;
}

.center_form--header:before{
    content:'';
    position: absolute;
    top: 0;
    left: 0;
    width: 100%;
    height: 100%;
    background-image: url(https://i.postimg.cc/bw0JjXgn/8-bit-game-wallpaper-42148.jpg);
    background-color: rgba(0, 0, 0, 0.4);
    background-repeat: no-repeat;
    background-position: center;
    border-radius: 20px 20px 0 0;
    filter: blur(2px);
    -webkit-filter: blur(2px);
}


#formtitle {
    position: relative;
    display: inline-block;
    width: 100%;
    margin: 0;
    font-size: 15px;
    text-transform: uppercase;
    font-family: 'Press Start 2P', cursive;
    
}

.center_form--elements input[type="text"] {
    position: relative;
    width: 90%;
    height: 10%;
    margin-top: 2%;
    margin-left: 3%;
    display: block;
    border: none;
    outline: none;
    border-bottom: 1px solid #ddd;
    background: #f4f7f8;
    font-size: 18px;
    margin-right: auto;
}

.center_form--elements input[type="submit"] {
    position: relative;
    margin-top: 3%;
    margin-bottom: 3%;
    -moz-box-shadow: 1px 1px 15px 1px black;
    -webkit-box-shadow: 1px 1px 15px 1px black;
    box-shadow: 1px 1px 15px 1px black;
    background-color: #1A1D1E;
    border: 1px solid #1A1D1E;
    display: inline-block;
    cursor: pointer;
    color: #FFFFFF;
    font-family: 'Open Sans Condensed', sans-serif;
    font-size: 14px;
    padding: 1% 5%;
    text-decoration: none;
    text-transform: uppercase;
}

<div class="center_form">
        <div class="center_form--header">
            <h2 id="formtitle">Press start!</h2>
        </div>
        <form>
            <div class="center_form--elements">
                <input placeholder="Name" type="text">
                <input placeholder="Email" type="text">
                <input type="submit" value="START">
            </div>
        </form>
    </div>