This method is great for painting a multi-data mask map for your scene. For example on a black background, you can use red, green and blue to create 3 masks in a project in PS or w/e.
For example, lets say we use "green" to paint where we want buildings, or their surface shaders to go, red where dikes/ditches go, and blue where roads go. And in another project you could use RGB to create different farm patches based on your first map as an overlay. In terragen, you now have two images with 6 masks for your scene.