Available with 3D Analyst license.
When adding a feature class to a terrain, you need to indicate its surface feature type. This defines the role the feature class will play in defining the terrain dataset surface. There are mass points, breaklines, and several polygon types. Breaklines and polygons also have hard and soft qualifiers. These indicate to the natural neighbors interpolator whether the surface crosses over the features smoothly (soft) or with a potentially sharp discontinuity (hard).
Point and multipoint feature classes can only be represented as mass points.
Polyline and polygon feature classes can be represented as any of the following:
For more information on hard and soft qualifiers, see Hard or soft surface feature Types.
For examples of representing terrain surface data, see Points, lines, polygons (mass, break, clip, erase, replace).