I have exactly the same problem, I recently started with 3dgs and I am working on a test level, I picked up the terrain HMP that comes with the demo, and throw in some torchs whose light flickers. The walls that holds the torches and some other objects (door arches) experience light/shadow effects, but the terrain remains unlit.

I even put a static light and guess what? terrain remains unaffected. And I must say that I get no error while building or running the level.

How would I be able to make my terrain react to light?