So I'm not sure if there's been a solution found to this, but I'm hoping there's at least some ideas out there...

I've done more than my fair share of tall buildings (most of my skyscrapers are some version of 14 floors high), and when they're just built up from level ground, that's not a problem.

However, if you're trying to build more than just a couple floors on top of a particularly high hill/mountain/elevated terrain of any sort, you'll encounter a weird problem where the floors start to behave as if you'd been misusing CFE in the build as seen in the first screenshot, even if you've never used the cheat on that lot at all. What's more, there doesn't seem to be any clear rationale for what the grid is "trying" to look like on the misbehaving levels- it can have odd slopes and valleys appear. Normally this is hard to see because the game won't allow wall segments to be built, but if you force the issue by using a premade dormer window as seen in the second screenshot (or using unleveled CC walls), you can see the kind of weird wall height errors that would typically just appear from misuse of CFE cheats. It's also very important to note that using CFE deliberately does NOT allow you to fix these issues as you might otherwise expect it to- trying to adjust the grid in any of the usual ways (terrain elevation tools, diagonal walls, columns, or click+drag floor tiles) will either do nothing (as if you didn't have the cheat active at all) or will cause it to behave in wildly unpredictable ways, so it's not a viable workaround.

Additionally, trying to build a structure at a lower elevation and then just raise the whole thing up via CFE deliberately later on doesn't work either- in the third attached screenshot, the 4x4x4 tower is built with just regular walls and flooring, no CC or cheats anywhere, and you can see it initially behaves perfectly normally. But if you then use CFE and raise the entire structure, once you reach a certain height the levels will start to compress as seen in the fourth screenshot.

I'm sure this has something to do with the "top" of the build area, since even if it's not spelled out anywhere it's logical to assume that there's not an unbounded ceiling for the game to render, but I can't figure out what actually triggers this kind of behavior specifically, and it's frustrating to try to build a mountaintop temple or castle or other high-elevation builds, only to find this glitch showing up and preventing them from being able to be completed.

I'm pretty sure lots are actually a cube, so there's an (invisible) vertical grid too. Similar to hood view, where the world itself is a cube (and you can't raise mountains higher than the ceiling of the cube, or a valley lower than the floor of the cube). So I'm theorising that you won't be able to get around this, unless someone finds a way of making the lot cube taller (which would also increase performance requirements).