Two abbreviations that show up constantly on the Part 107 exam are AGL and MSL. Most people have a rough sense of what they mean. Fewer people can keep them straight when the exam buries them inside a tricky question. Here's the clean version.
AGL: Above Ground Level
AGL is measured from whatever ground is directly below you. If you are flying 400 feet AGL, you are 400 feet above the surface underneath your drone. That's it. The ground is your reference point.
This is how the Part 107 altitude limit works. The rule is 400 feet AGL, not 400 feet above sea level. So if you're standing at the base of a hill and you fly your drone up 400 feet, you're legal. The fact that the hill itself might be 2,000 feet above sea level is irrelevant to your AGL measurement.
MSL: Mean Sea Level
MSL is measured from average sea level, regardless of what the ground is doing. It's a fixed reference that doesn't move. When sectional charts show obstacle heights and airport elevations, they use MSL. When a METAR reports a cloud ceiling, that's also MSL.
So if an airport sits at 5,000 feet MSL and a METAR says the ceiling is at 6,500 feet MSL, the clouds are actually only 1,500 feet above the airport. That gap matters for operations and it shows up in exam questions.
Where People Get Tripped Up
The classic trick question involves flying near terrain or structures at elevation. Say you are flying in Denver, which sits around 5,400 feet MSL. You fly your drone to 400 feet AGL. Your drone is now at roughly 5,800 feet MSL. That is perfectly legal. Your limit is 400 feet above the ground below you, not 400 feet above sea level.
The other one is obstacle height on sectional charts. Charts show obstacle heights in MSL. So if you see a tower marked at 1,200 feet MSL and you're flying in an area where the ground is at 900 feet MSL, that tower only sticks up 300 feet above the local terrain. Knowing which measurement you're looking at changes everything.
The One Exception Worth Knowing
There is a 400 foot AGL limit under Part 107, but there's also an exception for flying near structures. If you're within 400 feet of a structure, you can fly up to 400 feet above the top of that structure. So a 300 foot tower could legally let you fly up to 700 feet AGL right next to it. That one trips people up too.
Questions like this are all over the Part 107 exam
FAA 107 Prep explains the reasoning behind every answer so you can handle whatever version of the question shows up.