I recommend buying a book that explains the different scenic methods, and one with lots of pictures is extremely helpful.

My scenery toolbox.

Planning scenery

It is important to think about your scenery before you begin to built. You should plan for hills, tunnels, mountains, plains, roads, cities, and water, or anything else you want to add. Remember that the purpose for building scenery is to increase the illusion that your miniature railroad is as real as the real thing. By effectively managing view blocks, you can control how much of the layout your viewers see at any single time. View blocks can be anything from a line of trees to a row of buildings. View blocks are also useful for hiding entrances to tunnels and edges of access holes.

Forced perspective

Forced perspective is another technique for enhancing the illusion of a miniature railroad. This means making objects in the background smaller in scale than they normally would be. In doing this, you're recreating the fact that things that are further away appear smaller to the eye.

Backdrops

Sometimes modelers like to make backdrops for their layouts. Modelers with larger layouts paint their walls around their layout, while smaller layout modelers often choose to make a plywood backdrop for their layout. If you don't think you're up to painting, try photographic backdrops. Some modelers take pictures that overlap on their edges, and have their prints turned into poster-size. They then trim these down and use them as their backdrops. Photographic backdrops are also sold at hobby shops ready to go.