This is a breakdown of my previous post with some handy Unreal 5 notes that I came across while putting this together.
Also, includes some of the Houdini generation in the second half.
Nanite triangle view
Splitting the terrain, trees, etc out into multiple mesh sections helps with distance field generation and better Lumen lighting.
You cant use transparency with nanite meshes, but you can fake some water effects with vertex colors and material tweaks.
A simple example of using vert colors in the terrains material.
One of the vert color blending nodes I used to put it all together in Houdini.