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Why does the altitude change so quickly?

The altitude you see is calculated from the air pressure measurement at that moment in time.  Due to air turbulence, the pressure changes can be inconsistent, causing the calculated altitude to be displayed in unexpected ways (such as seeing a momentary increase in altitude of a free-falling skydiver).  As a rule of thumb, the slower the camera with sensor pack is moving through the air (less turbulence), the more accurate the altitude will display.

A smoothing setting is new with software version 2.0 that can be used to filter out some variations in the displayed values.