The Orthometric Height or Geodetic Height is the vertical distance from a location on the Earth's Surface distance to the geoid (blue surface in the illustration). Because the earth geoid is set a the level of the average sea level it is often called the elevation at Mean Sea Level (MSL). 

The Ellipsoidal Height of that same point of the Earth Surface is the vertical distance from that point to the ellipsoid (ochre surface in the illustration).

Local mean sea level

There are several realizations of local mean sea levels (or local vertical datums) in the world. They are parallel to the Geoid but offset by up to a couple of meters. This offset is due to local phenomena such as ocean currents, tides, coastal winds, water temperature and salinity at the location of the tide-gauge. 

For example, Belgium is using TAW (Tweede Algemene Waterpassing) and their neighbor Netherlands uses NAP (Nieuw Amsterdams Peil). This often creates confusion when doing projects that cross international borders. Because the elevation is measured with respect to a different local vertical datum the elevation numbers between different map can differ. 

Where to set the proper level?

The proper elevation reference level (datum) needs to be set in your photogrammetry process. That is the processing step before you start working in Virtual Surveyor. Have a look at the total workflow here on how Virtual Surveyor relates to the photogrammetry and the entire drone survey workflow.

Virtual Surveyor offers an easy way to correct for a different datum if you didn't set it properly in your photogrammetry process. You can set an offset level to the entire terrain through the Offset Terrain function in the Home tab.