Notepad
Paint
Google Earth
Photoshop
Create-a-World Tool Beta
First, create two images of size 1 x 1, a black dot and a white dot.

Look at the tool bar and "add" -> "image overlay" then you'll see this screen.
Specify the black dot and it'll automatically expand to a big square.
Create a folder there to contain everything in this project. (Important!)
Give it a name and then finish.

Go to the altitude tab and set them be "absolute" -> "10m".
Then increase 10 metres for each of the big white squares and make sure you give them a name to recognize.
Then, set the opacity to somewhere near the left. A quick way will be to slide the whole thing towards the leftmost and then click once on its right then it'll automatically goes to the "1a" value of opacity.

Now, if everything you've created are in the same folder, click the folder and copy it.
Open the notepad and paste.
Now you'll see some sort of XML and don't worry, we are getting through.
In the beginning of the file, it'll tell you something you won't understand or you shouldn't bother to read them. However if you're smart enough, you'll notice the names, the altitude are all listed on the large thing that you've just pasted. For example:
<groundoverlay>
<name>Black</name>
<visibility>0</visibility>
<icon>
<href>C:/Users/Joshua/Desktop/black.jpg</href>
<viewboundscale>0.75</viewboundscale>
</icon>
<latlonbox>
<north>22.42851489118302</north>
<south>22.40641889798723</south>
<east>114.2429736753294</east>
<west>114.2190713814727</west>
</latlonbox>
</groundoverlay>
This thing is the black square you put at the beginning.
The next similar thing is the white square.
And all the white squares would be following.
Look at the section of the white squares and find the line: <color>xxffffff</color>, where xx should be a hexidecimal number. Copy it, then go to replace, put the value in the "target" box, and type 09ffffff in the "replace with" box. Replace all. then, select the whole thing and copy.

This is the final image.
Then, print screen it and put it into Paint. Trim it until it is a perfect square. and make sure you invert the colour! This is because in our setting, white represents low and black represents high. However, Create-a-World doesn't. It recognize it in the opposite way so you need to make sure you invert the colour. Save it as a .bmp file. (Important!)
Now, go to Goo

Print screen when you are done.

Then, paste your print screen on top of the background. It should automatically create a new layer, if not, do it yourself.
Then, crop it to the same size to your .bmp file.

If you can't select it within one time, use a magnifier to zoom the image, hold shift and select the missing areas. Make sure you cover up all waters!

Resize the image into 2048 x 2048 and save it as PNG.
Double check Image -> Mode. Make sure it is greyscale and 16-bit.
Now, open up Create-a-World.
Start a new world and load the image you just made.
This is what you have:

However the land is nowhere smooth. Use your terrain smooth tool to fine tune it. That one I don't need to teach you.
Have fun messing around.
Edit:
1. If you are making beaches, skip the part of blackening the sea. In this situation, you need to edit the underwater terrain in CAW.
2. Theoretically, you can add as much as 255 white layers on top of the terrain, with the color tab set to 01ffffff. In my example, I didn't go strict on this aspect but if you are interested, consider this formula: opacity = HEX(255 / number of layers).