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Creating a New Level Folder and File

First, we'll have to create a new level folder and file where all the data for our level will go. To do this, go to File -> New.

This opens the following window:

In the Name field give our level a name, for example NewLevel. We are going to make a small level, so set the Heightmap Resolution to 128x128, and then click OK.

After a while, you'll see a checkered floor and blue 'sky' in the Viewport. 

Great, we now have an empty level. Let's make that checkered floor a bit more interesting!