Atlas question

I would just like to verify something. Let me know how wrong I am:

Atlas allows me to create a large terrain from a single texture. For example, I could create a village map in photoshop with a field, some paths, some dirt spots (where houses would be placed) etc. I could then take that huge .jpg image and lay it over a flat terrain. Then I could just use the editor tools to build hills/valleys and add a river/lake waterblock.

Is this (sort of) how Atlas works?

Thanks