Well it seems fairly obvious to me. There's a large difference in charge between the upper ionosphere and the storm layer, just like the potential difference between the Earth and the clouds acting like a huge capacitor, and when enough charge builds up it discharges. I imagine lightening mostly hits the Earth because it's the shorter path of least resistance?

They are known as "sprites" and I have seen them described like this on a TV documentary at least 10 years ago if not longer.

It was a satellite in orbit (possibly even the ISS that 1st saw them if I recall) I've not bothered to check this I am just going on my vague memory of the documentary I saw but it was at least a decade ago.