Fleshing out some terrain details

The question of terrain types seem to be the simpler one. After looking at a number of strategy games, I concluded that there should be at least one type of terrain that has no modifiers. Dirt, sand, grass, something like that. Then there are natural terrain types: forests, mountains, water. Since I want to keep it simple, this seems to be more than enough.

But wait. Should I allow forests on mountains? Sure there are examples of this in real life, but what would it mean from a game architecture point? I need to have traits, rather than types, for my terrain. But they don't mix well - if I were to just select traits for my tiles, like I did with mountain and forest, what would stop me from selecting forest and water? Or water and mountains? Those don't make sense. Ok, I might be able to come up with some sort of explanation for them, but if I am to play the game, I want it to be as simple and clear as possible. Forest on the middle of water? Come on...

On the other hand, one game - Battle for Wesnoth - was just fine without foresty mountains. So it is settled, no forest on hills. But there is another question: Should hills be stackable, or no? By that I mean if I am on sea level, and I go on a mountain, should be there other terrains that are even higher than where I am?

Well, that would raise problems similar to the trait-vs-type dilemma: it would mean there is no mountain type, since just setting the elevation level acts as a mountain. However, it would also mean I would have different heights of water. That is ridiculous.

(Of course, when I'm writing these down, I'm just reflecting on what I probably have thought about. But my memory is far from reliable, so it is more like a logical summarization then recalling what was my line of thought. Because of this, it seems that I'm quick to jump conclusions about design. However, this is not the case - what seems to be a minute decision here is often an hour-long munching on details and weighing cons and pros.)

So what I settled on is I will have these terrain types: Grass, Water, Forest, Mountains. Now another question: what effect should they have? Because it would be boring if every unit would behave the same on every tile. Also, Sun Tzu said a lot of things about terrain, and I'm sure it wasn't in vain. But what effect should terrain have on units?