It depends.  Sometimes it's a lifesaver, but most often it's just a cheap way to smooth a bumpy road (lame pun intended)

It only a small part of Earth Magic, and pales compared to Giant Form, Nature's Cloak, etc...

That said, I have used terraforming to:

1. Let a city expand into swampland.

2. Allow a cornered unit to escape.

3. Create a direct route to enemy territory.

4. Smooth the road for an important stack.

5. Improve a settling spot.

6. Destroy a settling spot.

Sometimes, when you lower a hill, that act will create a 'tile yield' plot where you can create a city.

I used it in my last game to make enough room for a city to build a logging camp that kept giving me an insufficient space message.  And enchanted hammers and earth elemental are both very useful.  

Check out https://forums.elementalgame.com/436647 for a fun spell/magic mod by mqpiffle that has some neat earth spells as well.