From my experience quadding on my druid, z-axis is taken into account for the distance the spell covers. If I stand at the top of a hill and use lumi staff for example, once the mobs enter cast range they can hit me before the Lumi staff cast ends if the hill is tall enough. If I stand on flat ground at max range lumi staff cast lands and gives me room to move before I get hit.
I use Lumi staff as an example because it has a long cast time compared to our quad nuke spells. I can only assume this applies to all spells, but I don't ever kite mobs near hills outside some quad camps on druid.
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