Create from Point Cloud
You can access this tool from the following:
The Create from Point Cloud tool utilizes one or more point clouds to create a Terrain Model.
A point cloud is a data file which can include a large number of points on the surface of an object. A point cloud is a set of vertices in a 3D coordinate system and these vertices are defined the by X, Y and Z coordinates. Point clouds are usually created by 3D scanners. These devices measure a large number of points on the surface of an object and output a point cloud as a data file. The point cloud represents the visible surface of the object that has been scanned or digitized. Point clouds are used for many purposes, especially to confirm measurements between the DGN model and the real world.