If I am not mistaken, the 400 ft altitude is the distance from the ground to the drone, not the distance above the pilot and controller. An example would be, you are standing on the edge of a 200 ft cliff. So, if you launch your drone straight above you to 400 ft you are within legal distance. Then you fly the drone off the edge of the cliff over the valley below. Now the drone is considered to be 600 ft above ground. That is my understanding of the rule.