* Clouds are in the sky. The sky is the vast expanse above us, and clouds are made of water vapor or ice crystals that form within that space.

* Clouds can be at different heights. Clouds can range from very low (like fog) to very high (like cirrus clouds). So, while clouds are in the sky, they aren't all at the same level.

So, you can't really say one is higher than the other. It's like saying "Which is higher, the ocean or a wave?" The wave is part of the ocean.