You can change the range of the radar with the bracket keys [ ] .
Planes that are at your altitude will have larger, more opaque markers on the radar. The further apart you are in altitude, the markers get smaller and more transparent.
It doesn't tell you if they are higher or lower, but it does help to keep from ramming a team mate, or to see who is turning on your tail. Sometimes, you have to use the free camera to look inthat general direction to see if they are higher or lower, and by how much. Also, don't hesitate to toggle through your targets to get range information in the camera window.
Remember, this is not true "radar" in it's level of detailed information, but more of a visual aid to situational awareness (because turning your head and looking around, typically only reveals a frustrated wife with a list of chores....)
Thanks. Warchylde. Another thing I don't quite get is how I'm being sneaked up on. Scenario is: No one near by on the map, then suddenly one or two pop up out of no where at about the same time they're lighting me up. If it's a heavy or an upper tier, it's already too late.