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Small map - 100-475 ft. (430-475 ft is your best bet, but some have been known to spawn in the high 500's and high 300's 350-375)
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Medium map - 500-700ft (650ft is your best bet).
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Large map - 500-900ft. (You may be able to see a floating island at 450)
Taken from http://wiki.terrariaonline.com/Floating_Islands