From TDN

Is there a Terrain editor? Not currently, but you can download the TGE or TGEA demo and use that to create .ter files with the terrain. Your assigned textures go into a terrain folder next to the ter file, then a detail texture can be drawn over top of all that. See the desertLevel.txscene in the FPS demo for an example. TorqueX can also import 16-bit raw heightmaps created with your favorite terrain editing application (examples or documentation needed, this is apparently broken functionality at this time), or auto-generate a heightmap based on various parameters.

The 3D version of Torque Game Builder is currently under development and should be released soon. It will support a full terrain editor just like Torque Game Engine.

What about Megaterrain or Atlas? Not currently, although TorqueX uses clipmapping, similar to TGEA's Atlas terrain system. This allows the use of much larger textures because portions of the texture are paged in and out as necessary, greatly reducing the cost of rendering the terrain. See this post by Thomas Buscaglia for more information. The geometry itself isn't paged like Atlas so you are limited by available memory.