Sounds like you’re on the right track. Or at least, you’re handling it the same way I’m handling it, so hopefully we’re both on the right track. 
If you’re not familiar with the jargon, you are basically making a voxel engine or block engine. Splitting into chunks and rendering them as meshes is the usual way to do it; it’s how Minecraft works, for example. And using an atlas to help chunks batch is also common.
Most of the time though, you only use voxels if you want the players to be able to modify the world in the game. If you just want a Unity editor tool that you can use on your own and the players can’t affect the world, then there are better implementations. But since you’re already mostly done with this implementation, I’d suggest you keep it and use it to make your levels destructible. Players really like being able to blow up stairs with rocket launchers. 
I’d recommend reading more here: Voxel Resources & Engines for Unity « Unity Coding – Unity3D
and some of this mega-thread: After playing minecraft...
I wrote a blog post about my implentation as well: Blocksmithing – The Expedition
There are some assets you might want to check out on the asset store too… if you just want an FPS arena editor and don’t really care about voxels, then ProWorld is pretty great, and they have a free version you can try out. If you do want to implement your own voxel system, you could check out MegaSplat, which will handle all your combine-textures-into-an-atlas-and-automatically-assign-vertex-uv needs.