Wilbur is great basic terrain height map editing tool to create ArmA 2 terrains.

1. Filter → Noise → Fractal Noise
2. Filter → Fill → Fill Basins, use default -1 value
3. Filter → Mathematical → Span, Low = 1000, High = 2000
4. Filter → Noise → Percentage Noise, 5%
5. Filter → Fill → Fill Basins
6. Filter → Erosion → Incise Flow; blur 2, amount 3.5, flow exponent 0.35, effect blend 0.25
7. Filter → Fill → Fill Basins
8. Filter → Erosion → Incise Flow

That makes quite nice looking eroded terrain.