In order to enhance the sense of depth in the scene, and to bring out subtle features in the terrain, you will exaggerate the height of the terrain.

The Scene Properties dialog box lets you set properties that are shared by all of the layers in the scene. These include the vertical exaggeration, the background (sky) color, the coordinate system and extent of the data, and the way that the scene is illuminated (the position of the light source relative to the surface).