The reason not to go above 400' is because the FAA and the Government says no. That's restricted airspace, and illegal without permission / permit.
This is a typical misunderstanding by people new to RC and not properly trained by someone that knows. The internet has created this misunderstanding so it's really nobody's fault.
That is just flat-out not true. The 400' ceiling for multis (and all RC craft for that matter) is a
recommendation from the FAA developed to create a buffer between controlled airspace and non-controlled airspace in the hopes of preventing contact with FS aircraft.
I am a licensed FS pilot (30 years) and have been flying RC for 25 years also. We have
always been able to fly RC above 400'. The fact of the matter is that talk of this so-called 400'
ceiling never happened until all these park flyers and self-flying crafts came along. Our charge was to fly responsibly, which we did. That is STILL the case. I can, and DO fly all of my multis and fixed wings (that can, of course) above 400' on occasion. The key is doing so responsibly. The exceptions are the recent crafts regulated by manufacturers' software and not laws.
Some say it is an attempt by the larger manufacturers to self-regulate before government (in the US, at least) does. I would argue that DJI (as an EXAMPLE) could care less about our responsibility. They are covering their OWN asses. This is not for our benefit. It is for their own.
I own a P3, a P4 and a Typhoon H. They are all ceiling limited to 400' by their manufacturers. I knew that going in. I didn't like it, but I made a decision as a hobbyist that I liked the benefits these crafts provided more than I disliked the limitations imposed by their manufacturers. I have many other multis that I can fly anywhere and to any height I please. I use those when I want to do so. For reference, none of my fixed wing aircraft have these silly restrictions.
I had hoped that the rebellion from consumers would one day force manufacturers to waive this silly manufacturer-imposed restriction. I have about given up on this. What I am still holding out hope on is the lead DJI has taken in at least allowing us to waive their responsibility by using a CC to verify our identity and acknowledge that we know what we're doing when making certain flying decisions. I haven't looked into this much yet but at least it gives me hope, and it looks like it could be a start.
There is no reason they couldn't add the self-imposed ceiling into this waiver. Until that happens, I'm restricted to where they say I can fly, including only below 400', but it's
not regulatory or a law. It is industry imposed based on an FAA recommendation. It is nothing more nor nothing less. It just is.
Just so we all know what the law is. There isn't one on the ceiling. Period. What there is, is liability you accept as a pilot when you go above it, but don't be fooled. You accept that potential liability every single time you takeoff. Altitude doesn't matter.