Procedural terrain refers to landscapes generated using algorithms and mathematical functions rather than traditional manual design. This technique allows for the creation of vast and varied environments in video games and simulations, providing unique experiences each time a scene is rendered. The process often involves noise functions, such as Perlin noise, to simulate natural features like mountains, valleys, and rivers. By adjusting parameters, developers can create different types of terrains, from rugged mountains to smooth plains, enhancing realism and immersion in virtual worlds.