I use Photoshop to create these images, but you could also use other programs like GIMP.
Step 1) Create a new Photoshop file. Make sure it is 384x384, as this is the size that mapgen uses. Run "Filter->Render-->Clouds" until you get an image that you like.
2) Use Dodge/Burn or the brush , with transparency, to modify the image and raise or lower some areas to your liking.
3) If you want to and know how to, use the "levels" menu to make the blacks blacker and the whites whiter. This will give more depth to the image so that the resulting landscape will have more height variation. *note - If you have flat areas that you do not want covered with water, make sure that they are not pure black. Locomotion will say that it is too low and will not let you build on them unless you elevate your railroad tracks.*
4) Run "Filter->Blur->Gaussian Blur", set it somewhere below half strength so that your image loses some detail but not too much. This will soften the landscape and make it come out smoother.
5) Now we will add some variety and texture to the simple landscape that we have so far. Create a new layer on top of this and fill it with black. Run "Filter->Noise->Add Noise", then desaturate it so it's greyscale and run another Gaussian Blur to soften it up a bit.
6) Set the noise layer to "Soft Light" and adjust the transparency so that it is just barely distinguishable from the bottom layer. Use the eraser or a layer mask to remove texture from areas you want to remain flat. This will be your final image.
7) Save that image as a .BMP and use mapgen to create the .sc5 file. Import it into Lomo's landscape editor and start filling up the map with towns, industries, vegetation, and the like.
There you go! You have just created an intricate, detailed landscape!
Just in case anyone wants to play around with it, I've uploaded the landscape file that resulted from this tutorial.
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