A ceiling is the height of the lowest broken or overcast cloud layer, or vertical visibility into an obscuration when the sky is hidden. A scattered layer is not a ceiling. In a METAR, OVC007 is an overcast ceiling at 700 feet above the ground, and 2 statute miles is already below the Part 107 minimum.
Which layer counts
Broken means the sky is covered enough that the layer counts. Overcast means it is covered. The ceiling is the lowest of those layers, not the highest one on the page. A scattered layer, and a few clouds, do not create a ceiling even when they are the lowest clouds you see. The height of the highest scattered layer is a distractor. So is "the maximum legal drone altitude." The ceiling is a weather height. The 400-foot limit in §107.51 is a regulation. They are not the same number.
Vertical visibility is the ceiling when an obscuration, such as fog or heavy snow, hides the sky so completely that the observer cannot see a cloud layer and instead reports how far up you can see into the obscuration. You do not ignore that group and go hunting for a scattered layer above it. The full order of METAR groups, including wind and altimeter, is already on the METAR page. This page answers two narrower questions: what the ceiling is, and whether the flight meets §107.51.
Fog is a cloud on the surface. A small temperature and dew point spread makes fog or a low ceiling more likely. That spread, and the front that often brings the change, is on the fog and fronts page. Stable air is the pattern that favors the layered ceiling. It is described on the stability page.
OVC007 is 700 feet, not 7,000
Sky-cover heights in a METAR are hundreds of feet above ground level. You add two zeros to the three-digit group. OVC means overcast. 007 means 700 feet. OVC007 is an overcast ceiling at 700 feet AGL. It is not overcast at 7,000 feet, which would be OVC070. It is not a visibility of 7 statute miles. Visibility is the group that ends in SM, earlier in the report.
The same scaling reads every other layer. OVC006 is overcast at 600 feet AGL. BKN010 would be broken at 1,000 feet AGL, and if it were the lowest broken or overcast layer it would be the ceiling. A SCT layer at any height still would not be the ceiling.
Two statute miles and a 600-foot overcast
Section 107.51(c) requires minimum flight visibility of 3 statute miles, observed from the control station. Section 107.51(d) requires the aircraft to stay at least 500 feet below the cloud and at least 2,000 feet horizontally from it. A site METAR that includes 2SM BR OVC006 fails the visibility number on its face. Two statute miles is less than three. BR means mist. Mist is not a reason to ignore the visibility. The wrong answer, that the flight is acceptable because mist is not precipitation, treats the phenomenon code as if it could outrank the mileage. It cannot.
The ceiling in that report is the overcast at 600 feet AGL. Staying 500 feet below a 600-foot cloud base leaves almost no usable height, and the visibility is already illegal for a standard operation. The question's conclusion is a no-go without a waiver. The report is not "well within legal minimums." Cloud clearance and the 3 statute mile rule are spelled out on the visibility page. A waiver of §107.51 is a separate approval. The METAR does not grant it.
Deciding the flight from one report
You are set up at the control station. The observation reads 2SM BR OVC006. You decode the ceiling as overcast at 600 feet AGL, and you decode the flight visibility as 2 statute miles in mist. Both facts point the same direction. Visibility is under the 3 statute mile minimum, and the ceiling is very low. You do not launch a standard Part 107 flight. You do not talk yourself into it because the mist is not rain, or because a scattered layer somewhere else in the region looked higher. If a later report shows at least 3 statute miles and a ceiling that lets you remain 500 feet below the clouds and 2,000 feet horizontally from them, you reassess. Until then the limitation stands.
A different report that shows OVC007, with visibility at or above 3 statute miles, still has an overcast ceiling at 700 feet AGL. You can name that ceiling correctly and still have to apply the 500-foot-below rule before you call the flight good. Naming the ceiling and meeting the cloud clearance are two steps.
The trap
Calling the highest scattered layer the ceiling, or calling the ceiling the legal drone altitude, misses the broken-or-overcast definition. Reading OVC007 as 7,000 feet or as 7 miles misses the hundreds-of-feet rule. Treating 2SM BR OVC006 as legal because mist is not rain misses both the 3 statute mile minimum and the low ceiling. The ceiling is the lowest broken or overcast layer, or vertical visibility into an obscuration. OVC007 is 700 feet AGL. Two statute miles is below the minimum.
Practice the decoding on the free practice test. Weather reports are taught in the course.