I use the pink 1" foam. I then shape it using a Stanley Surfoam Shaver. If you Google it, I use the smaller curved one primarily. I then fill in areas of the foam with Celluclay. I love it. It is light weight and easy to use. Here are two photos showing a tunnel area I am working on in Z scale on my European themed layout:
You can see the layers of the foam, and a light coating of the Celluclay to fill in. I it painted green in preparation for the ground cover.
Cround cover is in place. Still some work to blend it inot the backdrop, but it is getting there.
Rob