Terrain
As is obvious from the utility's nature, it cannot edit landscapes. However, you can create a landscape in a regular editor and then use the unpack command to unpack it, replacing the old landscape with a new one.
Thanks to the -l switch, this command will not unpack the entire map, but only the landscape.
Terrain Modules
kw can also create terrain modules, replacing your current landscape with a custom one. More on this later.