Terrain - use Flatten Smooth and Noise

Flatten is your friend. Keep the levels simple at first. Raise a test section in one corner out of the way to the level you want, then use the Flatten button and the eyedropper to select that height and paint away at the terrain you want to raise to that height.

For water, use a lowered not raised section in the same way then fill with water. Experiment with the water level, try -1 say. Use the eyedropper again to fill your sunken areas with water.

Smooth will rather obviously smooth out any jagged irregularites and give a more natural look. Noise will add 'noise' ie random irregularities again for a more natural appearance!