Wed Mar 01, 2017 1:52 pm
You have your z-hop ("Retraction Vertical Lift" on Extruder Tab) set to 5.00mm. That's an unusually large value.
The simulation view shows the toolhead position at the beginning/end of the layer (after retraction/hop), which is why it appears to be "up in the air." With "travel moves" displayed as dkightley suggested, you will see the actual path for that layer -- including the "hop down, extrude, hop up" path. But the toolhead image is not painted continuously, so it will always appear at the layer start/end height.
I recommend changing your Retraction Vertical Lift to a smaller value. You shouldn't need more than 0.5mm (I typically use 0.1-0.2mm).