How Do I Unlock Terraforming?
To unlock terraforming you have to “beat the game” i.e., get to the end of the main questline. To do this, you need to upgrade Resident Services into a building and talk to Tom Nook and Isabelle. You will hatch a plan to get K.K. Slider to perform a concert on your island.
To do this you will need an island rating of at least three stars. To up your island rating, ask Isabelle for advice and do whatever she says. You will need to invite at least seven villagers to move in, plant a ton of trees and flowers, and produce a lot of outdoor furniture to effectively raise your island rating. Once you hit three stars you can have the concert and once it is done, you will unlock terraforming. You can unlock new terraforming patterns and capabilities in the Nook Stop. Also, you will have completed all the quests the game has to offer! Now it’s your island to do what you want with.