When importing terrain, the contour polylines that are created, might appear with sharp edges.
This is attributed to the contours being created based on the grid of elevation points that are imported. Therefore, the grid dictates the sharp contour edges.
If you wish to smooth out the contour polylines, simply follow the steps provided below:
Step 1: On the command prompt enter the PEDIT command
Step 2: Select Multiple polylines, either by pressing "M" or by right-clicking and selecting it.
Step 3: Select the contour polylines
Step 4: Finally, select the Spline feature of AutoCAD, either by pressing "S" or by right-clicking and selecting it.
The result will be the exact same terrain you have imported, with the edges of the contour polylines smoothed out.
