ScatterSky Confusion

#1 there are a couple of options to correct this, what happens in scatter sky is it works from the 0 plane up, anything below the horizon line is the band you are seeing, you can change the color to blend smoother with the terrain coloring, add a water plane for the island effect which will extend out there, add a ground plane with some texture and props to hide the horizon line, good props could be mountain ranges mapped to a plane object or a city scape or whatever you want.Your other option if you dont like these methods is use a high quality sky box instead, which would give you the floating world feel unless you added something at the horizon to give you depth. Things look this way because it gives you the freedom to hide the horizon with whatever you want to fit your chosen style and feel for your world.

#2 @Ethan

The problem is your game lets the player get to places where he can see that the terrain ends.

In most games the player is limited to areas where he cannot see under the horizon or fake geometry is placed into the scene to make it look like there is terrain at a distance.