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I actually wonder a bit about the exact details of the ground-level database in this case.
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Terrain data is averaged into 100 meter X 100 meter squares, then a calculation is performed on that averaged value. That's repeated for each square over the whole signal path. That's why playing with small increments in the simulator is usually "For amusement only" unless the area is pretty much flat as a pancake.
Ground clutter such as trees and buildings is not accounted for.