In which scenario do regulations not apply to small RPAS pilots operating within VLOS?

The correct answer highlights that regulations typically do not apply to small Remotely Piloted Aircraft Systems (RPAS) pilots operating indoors or underground, primarily because these environments are generally controlled and separate from the National Airspace System (NAS) where traditional aviation regulations are enforced. In indoor or underground scenarios, the activities do not pose the same risks associated with outdoor operations, such as air traffic conflicts or environmental concerns that regulations aim to address.

In contrast, outdoor operations above a specified altitude, high-altitude operations at airshows, and commercial operations over populated areas each involve factors like potential collisions, safety regulations regarding public safety, and coordination with manned aircraft. These scenarios require adherence to specific regulations designed to minimize risks to people, property, and airspace integrity. Thus, the regulations are essential for ensuring safety in these contexts, but they do not extend to controlled environments like indoor settings.