Elevation is an optical illusion.
One thing to remember when you're creating your farm design is that elevation is an optical illusion in Farm Town. Elevated designs come from "stacking" items behind and slightly off center of one another to give the illusion of elevation. You won't find any actual hills, waterfalls or any elevated features in the game, but you can create them with a little patience. (D. Carey)
Decide what you want to do with your Farm Town farm.
You can build massive farms devoted to crops, or you can balance your farm with a mix of buildings and equipment in addition to crops. You can create a Farm Town farm and devise elaborate and creative designs for your farm. (D. Carey)
How to make hills.
For example purposes only: If you want to make hills on your farm, you've got two options: either use boxes and flowers, or use hedges. For the boxes and flowers method, place a line of boxes in a row. Then plant flowers immediately in front of the boxes, and behind and one square over from the boxes. This gives the illusion of height and elevated dirt terraces, when you're not looking too closely. You can do the same thing with hedges; place a row of hedges in a line, and then place another row one block behind and one block over from the initial row. You'll see the illusion of a line of hedges parading up a hill. 
(D. Carey)
How to make lakes.
For example purposes only: You can make lakes or other bodies of water using river tiles and dirt paths. Start with a river corner. Add four dirt paths over your river tile; you'll need to place them on the grass first and then move them, as you cannot place dirt paths directly on water from the store. When you've got dirt paths over your river corner, place another river corner on top of the dirt, but slightly over. Then you can move your dirt paths over, and repeat by placing another water tile. Eventually, you'll have as many water tiles as you like and can remove the dirt paths entirely so it appears to be one large body of water. (D. Carey)
How to make waterfalls.
For example purposes only: Making waterfalls is similar to making lakes. Place a piece of river tile down where you want the base of your waterfall; preferably a piece with a v-shape bottom and a rounded back. Then place four dirt paths over the river tile. Place another river tile on top of the original, but offset it by one row. Then move the dirt paths onto the new river tile. Place another, and offset it again. Repeat. Eventually, you'll end up with a waterfall as many tiers high as you'd like. Add other elevation elements, such as hills or terraces, to complete the illusion. (D. Carey)