Characterizing trait variation across different ecological scales in plant communities has been viewed as a way to gain insights into the mechanisms driving species coexistence. However, little is known about how changes in intraspecific and interspecific traits across sites influence species richness and community assembly, especially in understory herbaceous communities. Here we partitioned the variance of four functional traits (maximum height, leaf thickness, leaf area and specific leaf area) across four nested biological scales: individual, species, plot, and elevation to quantify the scale-dependent distributions of understory herbaceous trait variance. We also integrated the comparison of the trait variance ratios to null models to investigate the effects of different ecological processes on community assembly and functional diversity along a 1200-m elevational gradient in Yulong Mountain. We found interspecific trait variation was the main trait variation component for leaf traits, although intraspecific trait variation ranged from 10% to 28% of total variation. In particular, maximum height exhibited high plasticity, and intraspecific variation accounted for 44% of the total variation. Despite the fact that species composition varied across elevation and species richness decreased dramatically along the elevational gradient, there was little variance at our largest (elevation) scale in leaf traits and functional diversity remained constant along the elevational gradient, indicating that traits responded to smaller scale influences. External filtering was only observed at high elevations. However, strong internal filtering was detected along the entire elevational gradient in understory herbaceous communities, possibly due to competition. Our results provide evidence that species coexistence in understory herbaceous communities might be structured by differential niche-assembled processes. This approach -- integrating different biological scales of trait variation -- may provide a better understanding of the mechanisms involved in the structure of communities.