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The sentence:

Some estimated that there are 25 assorted insects hanging in the air over every temperate square mile, in a column extending upward for thousands of feet.

(Question #1)
About "over every temperate square mile", which does it modify; "hanging" (i.e. hanging over every temperate square mile) or "the air" (i.e. the air over very temperate square mile)?

(Question #2)
About "in a column extending upward...", which does it modify; "hanging" (i.e. hanging in a column extending upward...", "the air" (i.e. the air in a column extending upward...), or "every temperate square mile" (i.e. every temperate square mile in a column extending upward...)?
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Possible modifiers:

1 Hanging where? In the air.
2 Hanging where? Over every temperate square mile.
3 Hanging where? In a column extending upward for thousands of feet.

4 Which air? The air over every temperate square mile.
5 Which air? The air in a column extending upward for thousands of feet.

6 Which square mile? The square mile in a column extending upward for thousands of feet.

The last one -- 6 -- is the only one that I would eliminate. A square mile is a flat surface and could not, in my opinion, be "in a column extending upward ..."

Question #1: It may be regarded as modifying both "hanging" - 2 - and "air" - 4 . There might not be one "correct answer" because both questions -- "where?" and "which?" can be answered the same way.

Question #2: Same as for Question #1. Modifying "hanging" - 3 - and "air" - 5 . Not modifying "mile", as noted above.

Note that the questions would not have come up at all if the close equivalent "floating" had been used instead of "hanging in air". Then the phrases in question could only modify "floating" because "air" would have been removed from the sentence.
Comments  
Thank you for the great answer, Jim!