It can be tiled too but then it has to be seamless. Actually it will tile if it's too small. What you always want is the texture is too big for the object and not the other way around cause when it gets resized the pixels will become visible in the render. One more thing. Click on your little mound there then right click on it and pick edit terrain. In the terrain editor slid the clip up ever so slightly till your mound is roundish instead of square. It will make it a million times easier to blend in then. Your eye is drawen to strait lines but not curved lines so much.