A flying creature creature with an altitude limit falls if it is above its altitude limit at the end of its turn.
From the Rules Compendium, p210, Flight Traits:
Altitude Limit: If a creature has a specified altitude limit, the creature falls at the end of its turn if it is flying higher than that limit. For example, a creature that has an altitude limit of 2 falls at the end of its turn if it is flying higher than 2 squares.
When a flying creature falls, it follows special rules; from the Rules Compendium, p209, Falling:
Flying Creatures: If a creature falls while it is flying, it descends the full distance of the fall but is likely to take less damage than a creature that can't fly. Multiply the creature's fly speed by 5 and subtract that distance from the fall, then figure out falling damage. If the difference is 0 or less, the creature lands without taking damage from the fall.
Essentially, flying creatures safely descend their flight speed, then fall the rest of the way.
So if a pixie (flight speed 6, altitude limit 1) ends its turn 10 squares up, it would safely descend 6 squares to 4 squares up, then fall the last 4 squares (taking 1d10 dmg & being knocked prone, barring a trained Acrobatics check).