does anyone know how these types of follow-me drones do with obstacle avoidance? do you just tell them to fly high enough that they avoid things by going over them?
They don't :). Its upto you to make sure it doesn't crash into anything. Its not a co-incidence that all the videos of this tech is shot in large open fields ;)
Obstacle avoidance is coming though! The research world is converging on a solution!
Obviously you can't. The geofence (as implemented in ArduPilot) is simply a safety measure; once the aircraft passes outside of a defined zone, it returns to a pre-determined waypoint inside the fence and waits for further pilot commands.
To answer the initial question, the latest versions of ArduPilot implement terrain following (based on terrain data loaded into the flight computer before-hand). Additionally, there is also now support for range-finding instruments like Lidar Lite [0], although I don't believe those are currently being used in the terrain following mode. Such instruments could conceivably be used to implement "look-ahead" functionality to more accurately avoid obstacles.
