particles terrain

I think you may be talking about Voxels (Volumetric pixels)

http://www.flipcode.com/articles/voxelland_part01.shtml

http://www.origo.hu/szoftverbazis/letolt.html?size=1376256&filename=TerraVox v1.4&letoltes=seged+teszt+terravox_14b.zip

another is here
http://www.xinix.org/sven/Hvox.Demo.zip