Problem with terrain editor

I’m going through Goldstone’s Unity 3.x Game Development Essentials and I’m on chapter 3 (Using Unity 4.1.5). I have no idea what I might have changed but every time I click on the terrain to modify using Raise Height tool, the second I stop using the tool the new ‘paint’ goes all blurry. The terrain (island in this case) is totally unrecognizable. I really have no clue if I changed something early on in a settings page or what but this is all very strange. Any help is greatly appreciated.

So the problem seems to be solved be setting the pixel error to 1.