Quote - "Still not making sense.   I set the cloud alt to 1yd Pic 1 shows sea level at zero and the clouds look to be 1yd above.  Ground in all is moved waaaaaaaay down"

This does make perfect sense. The ground level doesn't affect cloud altitude. If sea level is at zero and clouds are at 1, the difference between clouds and sea is 1. That's fine.

Quote - "Pic 2 shows sea level at + 8 yds - clouds remain relative to 1 yd above sea level"

It also makes perfect sense. You set the clouds at 1, so this means they remain 1 above sea level, even if you move the sea level to higher levels.

Quote - "Pic 3 - sea level is - 7 yds but look how the cloud layer altitude has gone UP"

This seems like a strange behaviour but it's caused by the fact that you moved the sea level below z=0. So, don't. There seems to be a non linearity in the algorithm. This looks like a bug to me.