If I have the maximum altitude set at 400+- feet and am standing atop of a neer sheer cliff with a valley below me that is 500-600 feet below the plateau above the valley, will the Phantom recognize its ground level at takeoff or from the bottom of the valley while flying over the valley?  Should the maximum altitude be set to allow for the depth of the valley below?

Thanks for the replies, new to this and still learning to think in three demensions.

Everything is relative to the take off point.

Except the home point which is an absolute location but which does not include altitude.  RTH altitude is relative to take off point.