When resting my forearm near top of guitar as Justin demonstrates, find myself strumming on the neck. How far is too far? Does it matter? (Restarting after giving up for the umpteenth time).
On acoustic I use all the string all the way from about the ~12th fret or so all the way to bridge depending on the sound you want. On Electric I have a tendency to stay below the bottom of the fretboard. The bridge being brighter and crisper and over the fretboard being more mellow. I am not aware of any reason to really limit where you strum, and playing around with the sound you get from stumming at different points is very helpful in creating dynamics. It also looks “super cool” to people who don’t play guitar when you move all around. A bit of showmanship is not that bad eh?
I don’t think I would go up past your fretting hand though 
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Its a little far, whats the guitar.?
R
One guy I was watching play the other day (and who I’ll be seeing play again later this afternoon) played a song (on acoustic) where his strum “pattern” involved the entire range from the bridge to the lower portion of the fretboard. Was a great example of how the place you strum affects the tone.
I’m not really at the point where I’m exploring dynamics that way yet. So when I strum my electric (a Les Paul), I tend to be somewhere between the pickups.
I think where you strum will depend in part on how you hold your guitar. I’ve noticed that when I play my LP, the most comfortable way to hold it is something I can’t really achieve when I’m sitting. The way most folks play with the waist of the guitar resting on their thigh puts the body of the guitar too far back for me. I have long arms and I end up with my strumming hand in a place I don’t want it. Trying that out just now, that’s basically the same spot you’re describing.
My instructor pressed me to use a more “classical” position when I’m seated. Which allows me to put my strumming hand in a reasonably comfortable position. But then my fretting arm feels like it’s WAY out there. The cable drops down between my legs when I hold it this way. The way I hold it when I stand is somewhere between those two. And the reason I can’t achieve that when I’m seated is related to the location of the cable jack and how the cable would hit my leg.
I play a smaller bodied acoustic guitar (Taylor GS Mini) and comfortably use the classical position when seated. And I mostly play that guitar seated.