I am doing a little bit of terrain work these last few days. I have finally come up with a method that I like for using pink 1/2" thick foam insulation board.
I have a hot-wire foam cutter, a cheapie I got at Hobby Lobby a couple of years back for $10, I think. That's what I am using to shape the pieces, cut smooth bevels for the hillsides, rough faces for cliff sides, that sort of thing.
I'm also using spray adhesive. Sounds a little crazy, I admit, but it seems to hold like cement and doesn't eat the foam. This way I can stack multiple layers for more impressive rock outcrops and hills.
So I cut the foam to the shape I want using the hotwire. Then I glue the layers together. So far so good.
The next step is painting. I found some black latex wall paint I had leftover from a DIY project, so I used that. Painted it on the foam, let it dry. Now when I spray paint the colors on the foam, the foam doesn't dissolve away!
Finally, once the black is dry, I hit the foam with three colors of spray in at least two layers of each color. You don't have to wait for each layer to dry - I like the mixed look, it seems more natural.
I'll post pictures once I get some decent lighting. I tried to take a few shots tonight, but... too dark.