Terrain?

When you go into the Database, tileset, there's something called terrain. It shows plains, forest, desert, etc, so what does that actually mean? Does that affect the chipset at all?

If you go to the tileset, you can set each part of a tileset to a number which will refer it to that terrain tab. So you can set what background is displayed in battle if a player runs into a battle while on that tile. You can also change it so the tile makes it so the player takes damage when taking steps on it. Also there is all the other stuff like encounter special type %. Then at the bottom you can choose stuff that will effect vehicles and them being able to pass that terrain ID.