Rough Terrain

The same as how smooth terrain is made. But with sharper edges. Displacements.

Rocks tend to be made of props unless it's a medium size cliff face and everything else is displacement work.

You'll have to be more specific if you want a better more precise answer though. Maybe give us an image screen capture of an example of what you want explained.

http://developer.valvesoftware.com/wiki/Displacement

That should give you some more information.