Re: [Divalent] AAD Ground reference: effect of DZ/airport difference
They set as of the location that they are turned on. For a dropzone with a small elevation difference between the airport and landing area it's not a huge deal. For other dropzones (Hollister, CA is one example - you do a 450 foot offset, though it's been so long since I jumped there that I can't remember which direction it goes) where the difference between locations is greater you need to do an offset.
This incident shows what can happen if you turn your AAD on at a significantly different altitude than that of the dropzone.