The “Paint” button in the new terrain editor doesn’t work if you had previously selected the “Flatten” button. You have to deselect the button, select another one (such as “Grow”) and then select “Paint”.
To reproduce, simply:
- Open the terrain editor (terrain → edit).
- Select “Flatten”.
- Select “Paint”.
- Attempt to paint existing terrain.
- Select another button, such as “Erode”.
- Select “Paint” and attempt to paint the terrain (it will work this time).
I noticed the issue after this announcement was released: New Terrain Tools - Out of Beta and Live for All.