The title pretty much says it all. Making a world with the Caves of Chaos preset causes the terrain to go to 256 rather than 255, where there are large flat areas. This also causes a strange quirk where hostile mobs will spawn on those flat areas regardless of the time of day, and undead mobs don't burn during the day. This is probably because the light level doesn't exist at that height, according to the debug screen. I'm not sure if another issue should be opened for this spawning, as blocks aren't supposed to go to 256 anyway. (I was originally going to report a bug for the mobs spawning during the day, but then I realized it was because the terrain was higher than it should be.)
(And forgive me if I'm doing this wrong. This is my first time reporting a bug.)
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Okay. Well either way, it is above the building limit. Breaking one of the highest blocks and trying to replace it is impossible, while it is possible two blocks down. Also, Caver's Delight only goes to 255 (or 254), as shown by cut off trees.
You are right about it not letting you build at y=255 when it should. (gives error when building at y=256, but not at y=255).
Has this been tested with any other preset/world type that reaches y=255?
Before I reported this, I did see how high I could build on a normal world to make sure I was remembering correctly, and could only get up to y=255. I thought that was always the case.
Setblock, fill,and clone will place blocks at y=255. Something else I found occurs if you place a lever at y=255 and try to activate it from the top of the hitbox (does not matter what is held in hand). This will also give you the error message that the building limit is 256 blocks high instead of activating the lever. This error seems to only affect blocks whose top part of the hitbox reaches y=256.
I added my vote. This is my favorite preset, and this is definitely a bothersome bug, as it would be nice to venture on top without being bombarded by hostile mobs.
There seems to be a lot of confusion with this report, so to clarify, this report is actually about 3 separate issues. The first one is that blocks can generate up to level 255, which is intended. That's the height limit. The second one is that the blocks actually do generate that high, causing unnatural flat areas. That's a problem with the preset, not minecraft. It should be taken up with its creator, Panguino. The third one is that mobs spawn at that level, which is MC-68565. In the comments, people are discussing two completely different bugs, MC-39120 and MC-11211.
The terrain goes to 255. 256 is the y value of your feet, so that part is invalid. The light level might be fixable, and the glitch probably exists because no world type other than superflat has ever really reached such extreme y values until now.