I'm using the NED 1/3 arc second data set to generate tiles to zoom level 15 for Cape Canaveral in Florida, and finding that the terrain looks accurate in appearance, but the elevation is too high by roughly 30m. The Cesium AGI STK World Terrain set uses NED data as well, and I can see the exact same artifacts and characteristics in the terrain I'm generating as that in the AGI data, except for the elevation difference, so it looks like we're working from the same data. Is there a parameter or step I'm missing when generating terrain tiles?
It turns out that the vertical datum used by NED is not the same as that expected by Cesium. The following tool can be used to convert the vertical datum:
The vdatum needs to be converted from NAVD88 to NAD83.
I'm going to have to recommend that you head over to the Cesium forum to find a solution. I don't think the developers that built AGI's STK Terrain Server are active on Stack Exchange.