ArcGis ArcScene Displaying terrain surfaces in 3D
A terrain dataset is a derived data source, calculated based on participating point, line, and polygon feature classes.
Terrain datasets are displayed similarly to TINs, where the symbology is made up of triangular facets and the nodes and edges that make up the triangles. The representation may also contain breaklines—lines that follow sets of edges that play important roles in defining the shape of the surface. Examples of breaklines are ridgelines, roads, or streams.
A terrain is used to describe a surface and does not necessarily have to be displayed in the 3D view. You can simply drape other data over it, such as an aerial photograph, to see the topography. However, you have the option to display the terrain as a layer in ArcGlobe or ArcMap. This may be required if you do not have other data to drape over the full extent of the terrain.