Shattered Kingdoms

If you're flying, and you type 'up' without an exit in that direction, it says you fly higher into the air, and likewise, lower, if you type 'down'. I've never thought this would really have an effect on anything, but I figured I'd ask anyways.

nopes, no effect.

I know that the spell fly gives you a penalty for fighting, what about natural races that can fly? Or riding a flying mount?

Natural races are unaffected, and mounting a flying pet is also unaffected.

There was talk a while ago about that being a stepping stone into other interesting aerial combat features, but that will probably never come to fruition. As it stands it's completely inconsequential.

I thought higher/lower made your flight made you more or less sensitive to the wind, like flying against it, and whether you resist it or if it tires you out.