@rolfy,
I really appreciate the feedback - I'm sure you get questions like this all the time, so I really appreciate your insight on these issues (I owe you a pint, btw).
Ok, this is starting to make more sense - so, if I wanted to make (for example) terrains that are larger than 3x3 segment size, is the best technique something like this:
1. Break up the terrain into 1x1 segments (100 units x 100 units) and make segments for each of these parts with only the center unit defined.
2. In FPSC, drop-in each of these "center-only" segments one at a time, so (for example) an 8x8 terrain would require 64 different segment pieces
3. Around the outside edges of the terrain, use the default ground center segment
I'm still a little confused about when you say, "place segment below this around the centre segment" - do you mean to define floor segments 1 layer below the non-center segments (as I thought only 1 floor segment could be defined per layer)... or were you saying that terrain pieces should be static entities all along?
Just as a side-note, I tried making one large static entity (8x8 segments in size) for each texture group (terrain floor, trees, and canopy) and collision worked except that there was a place around the middle (about 2x2 segments in size) where I'd get stuck
So, that's obviously not the way to go.