Terrain is "the physical features of a tract of land" (m-w.com). In EU2, each province has one terrain type that is assumed to cover it uniformly. Terrain has a strong effect on the movement and combat of land units. There are five types of terrain: desert, forest, mountain, plains, and swamp. In addition, rivers exist between some provinces. The terrain is the same in all scenarios, being defined in the file province.csv. You may find variations in some mods.