Ninety Nine percent of my hills are sold foam. Sometimes you can use the white styrofoam, (pebble type crap), for the inner layers. BUT, the hassle involved in trying to save a couple bucks, ... go ahead. I use the thickest high density I can find that day. 2-1/2" thick is the thickest I can find. Glue, (bonding method - Instructions on the can), the layers together in a rough build up of the hill. Either glue it to a rounded and feathered edged board or, if you are going to be using it in a table layout, a square base (so they can be rearranged) and leave the edges of the board so they'll fit together. I like to fill all the seams and cover around the base board with it. Let it dry as you decide where to carve steps and low slopes so the troops can get to the top of it.
These hills were made on 2 foot by 2 foot sections. I kept the bases of the hills away from the board edges so the table could be set up in different ways.
Hills are quite easy to make too. You do not need any fancy power tools, just a wood rasp, coarse file, rough rock, etc.
I do not use a wire foam cutter. Not only does melting foam stink it is a health hazard, plus the hot-wire cutters SUCK. There is two things to keep in mind; you want your troops to be able to stand on the hill, (so they will need a way up), and you DO NOT WANT TO MAKE THE SHITTY HILLS EVERYONE ELSE MAKES! Give them some character, make them look at least a little realistic. Don't just leave the sides of the hills at a 45deg angle.
You can still make stackable hills without having just plain green flat hills. They may only stack the way they were made, but they will be far more fun to play with. And if you want more hill configurations make another hill. Unfortunately with the system crashes I was experiencing last year a lost my pictures of the couple sets of stackable hills I made. But maybe that will be the next step-by-step I'll write.
Below is a couple more ideas for individual movable hills. And as we were talking about stackability. These are what the top piece of your stacking set would look like. Usually the piece they are being stacked on will have a pond or a crater hole that this top hill section covers up.
The hills above are made from high-density foam, (no base attached- just glued on a poster board and cut), the ones below here are made from a small piece of foam glued on hardboard, (so I can poke the tree into the hill), with plaster (sculptamold) built up around it.