In human form you can morph while on the ground or in the air as long as there's enough room around you. You need roughly 8-10 feet of clear ground(or air if you jump off a cliff) in order to morph. In dragon form you can de-morph almost anywhere. Dropping from above is sometimes the only way to get to certain areas such as wyvern nests and platforms in flying fortress areas. As long as there's ground(or water) below you, you can de-morph anywhere. Just be careful as their are some areas where you can fall to your death, such as Broken Valley.
