It would definitely be possible. With the ability to dig into the earth it should be quite simple to terrace a piece of land you own or are working on. If you have any more questions feel free to join our discord in my signature. We would be happy to help in any way

I am not sure if you can dig and teraform in that kind of way, but at the very least you should be able to construct artificial terraces

I know that you will be able to use dirt to plant things even where the dirt doesn't exist. So, a simple answer is yes. But I'm not sure how it will work

You cannot terraform simply by moving dirt, it won't work like that. Perhaps they will allow to you "build" a terraced area using construction or a similar skill but there's a good chance you'll have to research it first.