There are really three ways you have to work with some outdoor style terrains that I would use.
- Landscape Tool in UE4
- World Machine, Terragen, or similar third party heightmap generation program
- Sculpting a static mesh in your modeling program of choice
Often times there may be a combination of these that you would use rather than focusing on one particular one. It all depends on your skill with varying programs and the look/style your want for your game.
For optimization out of the box I would suggested UE4’s Landscape tool and a heightmap generated from #2. The landscapes that UE4 already use a LOD system to keep them optimized and since option #2 gives you a heightmap you can plug into the Landscape tool to get your terrain it is fully optimized in that sense.
If you make a Static Mesh variant you would need to create LODs for your mesh and since this is based on screen size/distance if you’re near it the entire mesh will be that single LOD. You would want to break your mesh apart into chunks to keep the LODs more optimized which can be labor intensive. I wouldn’t discount them all together based on this as there are situations where you may want to use these when other options don’t seem to give you the results you need.
I’m sure others with more experience in World Machine and similar software can offer more information than I can on it and hopefully they’ll offer some great tips, tricks, and advice for you as well.