Keaton describes their process of designing a 3D level in Unity. They began by using brush tools to create hills, mountains and terrain without textures. Keaton then added textures to the terrain using tools in the assets menu and paint brush. Additional elements like water were created using planes and multiple textures. Keaton shares the tools available for sculpting terrain, placing trees and other assets, and adding colliders to prevent players from passing through objects. A castle asset was downloaded from the asset store and trees in the courtyard were given mesh colliders.