I've been experiencing this problem on multiple levels and maps. Some of the areas inside the map get corrupted and are basically untouchable in terms of terrain. You can still walk on them but you cannot tweak the terrain without it totally spazzing out. I've attached some screenshots below.
Here you'll see the level from below. There are a lot of holes inside the terrain. I've tried all default terrain options from extrusion to cutting and they don't seem to patch up and of these holes. (Cutting it actually forces the game to freeze)
Another sign that the error is occurring is when you try to lay down texture and it comes out in blocks. You'll see above that Coastal Stone C doesn't come off the brush smoothly and stops abruptly in a straight line.
Next is if you try to erase any of the terrain you'll basically get the effect as shown above. Pieces of terrain will start disappearing when they're not even inside the radius of the brush. They start disappearing in a rectangular fashion.
Here's what happens when you erase enough. The whole thing bugs out and freezes. Also parts of the map that were okay to initially tinker with (most of the green areas) turn black and bug out as well.
I've had this happen to me on multiple occasions when my maps have gotten too big and too detailed in terms of texturing. I'm not exactly sure how to reliably fix this except for deleting the terrain tabs on the right side (You can keep the shape and massing of the terrain but have to delete your terrain palette.) While this isn't exactly a real solution it's the best I could think of without tampering with anything outside the engine itself. I'd love to hear if anyone knows of a solution to this without wiping out all terrain data. I've lost over 20 hours of work due to this bug on multiple occasions. I'd like to prevent this from happening to anyone else.
TLDR: Holes in Terrain are fixable by deleting your terrain palettes. Need a real solution without losing hours of work.