Since MC-997 was marked as a duplicate of this bug, there's a couple more parts that should be included.
When you are below the cloud level, looking up, any blocks behind the clouds are completely obscured as there is no cloud transparency (except, strangely, you can still see the sun and moon, as noted above). Then, if you fly in or above the cloud layer, they are transparent as usual, and you can see the blocks through them as per normal. There are screenshots of the effect on the MC-997 bug report.
So the cloud height is as expected, but the cloud transparency does funny things!
Tobyn
Since MC-997 was marked as a duplicate of this bug, there's a couple more parts that should be included.
When you are below the cloud level, looking up, any blocks behind the clouds are completely obscured as there is no cloud transparency (except, strangely, you can still see the sun and moon, as noted above). Then, if you fly in or above the cloud layer, they are transparent as usual, and you can see the blocks through them as per normal. There are screenshots of the effect on the MC-997 bug report.
So the cloud height is as expected, but the cloud transparency does funny things!