To the left of this section is a menu titled 'Terrain Editor', you choose the terrain you wish to edit from this menu. Below is a button which allows you to set the max number of terrains available in the above menu. Options are at the right side.
Name- Name the terrain. Damage- Set how much damage the terrain does to the character. (Ex: If it is a volcano type area where it is very hot, there may be damage that occurs to character due to environment)
Enemy Magnify A- Set if the enemies are magnified bigger/smaller on this particular background. Select Battle Background- Shows the background you are setting, click on to change it. Possibility- I think this is for the different vehicle's movement across the particular terrain type, but I'm not sure. Common Chara Display Method- I assume this is so that you can set the enemies appearance on this particular background, either so that you can see only the top half, the top 2/3, or the whole enemy (normal). Semi Transparent Body probably makes the enemy see through.