Forest ecosystems have a distinct vertical dimension, but the structuring of communities in this three-dimensional space is not well understood. Water-filled tree holes are natural microcosms structured in metacommunities. Here, we used these microcosms as model systems to analyze how insect communities and the occurrence and abundance of individual species are influenced by biotic and abiotic microhabitat characteristics, the vertical position of the tree hole, and stand-scale habitat availability. We found that both the characteristics of water-filled tree holes and their insect communities differ significantly between canopy and ground level. Individual insect species showed contrasting responses to the vertical position of the tree holes when important environmental factors at the stand and the tree-hole scale were considered. While some species, such as the mosquito Aedes geniculatus and the beetle Prionocyphon serricornis, decreased in abundance with increasing tree-hole height, the biting midge Dasyhelea sp., the non-biting midge Metriocnemus cavicola and the hoverfly Myiatropa florea increased in abundance. Our results suggest that vertical stratification in forests is most likely driven not only by variation in tree-hole microhabitat properties, i.e., niche separation, but also by individual species traits, such as adult dispersal propensity, food preferences and mating behavior of adult stages, and interspecific competition of larval stages. Therefore, communities of insect species developing in tree holes are likely structured by competition–colonization trade-offs predicted by metacommunity theory.