I'm surprised Skillator didn't mention his own experiments into tiling terrains in 3D Gamestudio. This approach is necessary for large outdoor levels. As already mentioned, use of LOD is absolutely crucial for outdoor levels. However, 3D Gamestudio only has built in LOD for mdl models; thus, to have LOD on the terrain itself you'ld need to write code yourself to do that. And Skillator has done some interesting experiments into using small terrain tiles, tiling away into the distance. This approach to creating terrain would allow you to easily swap in less detailed versions of terrain tiles for distant tiles.