Right, this is on purpose. We ban this because allowing a user write
access to a chroot target is dangerously similar to equivalence with
allowing write access to the root of a filesystem.
If you want the default directory that users start in to be writable
then you must create their home directory under the chroot. After
sshd(8) has chrooted to the ChrootDirectory, it will chdir to the
home directory as normal. So, for a passwd line like:
Create a home directory "/chroot/djm/home/djm". Make the terminal "djm"
directory user-owned and writable (everything else must be root-owned).
Set "ChrootDirectory /chroot" in /etc/config.
A variant of this that yields less deep directory trees would be to set
the passwd file up as:
Create "/chroot/djm/upload", with "upload" the only user-owned and writable