As Antaran said, hair is not really the best way to create grass but you can grow hair directly on a terrain - just make sure you select "Geometry Based." Also keep in mind your scene size - in a Large scene 30cm high grass is going to impossible to see - you would need hundreds of millions of hairs to start to notice the effect. Note that the hair shader is hugely important to create a decent effect - you need variation in color and length, a tiny amount of frizz and wave, some clumping and a little bit of density variation (I didn't use that last one in this example). The hair scale is also important - for this example I used the Very Large thickness and in the shader I set the root to 100% and the tip to 40%.

Below is an example of hair-based grass on a Medium sized terrain. Note that I only added grass in the area right in front of the camera so that I only needed to use 25,000 hairs instead of whatever crazy amount I would need for the whole terrain. If I'd been doing this for a render I would have covered slightly more of the terrain and used a better shader on the more distant terrain so it looked more like the grass continued on. I would have spent more time of the hair shader too - I spent longer editing this post than I did setting up and rendering my example. :)