Answer: Trying to explain terracing in this short amount of space is difficult but here are the basics:
To terrace a hillside, you will want to cut very wide step-like areas out. Usually this is done starting at the base. Flatten out the top of a raised area, butting the front against some form of retaining wall. When the soil starts to pile up behind the flat area, build another retaining wall and start flattening out the second tier. This will continue up to the top.
The barrier to keep soil from tumbling forward in the front of each 'step' needs to be solid and firm enough to keep the soil behind it in place. A retaining wall can be built of rocks, bricks, cemented blocks, interlocking blocks, railroad ties or many other materials. The more weight behind it, the more solid the structure should be.
I recommend adding a drainage pipe and gravel -- or at least a buffer zone 10" deep of gravel behind the back of each retaining wall. This will keep water from backing up against the retaining wall.
Maybe the easiest approach would be to check out some landscape design books from your local library so you can glean ideas and get a mental picture of how you'd like the area to look. It may be that terracing is not an option with the hillside and simply planting a ground hugging plant is the best way to handle the situation. In any event, best wishes with your project!
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