What's your question exactly? You say you've got terrain with props on it, and the images you posted are of terrain with props on it.

I'm guessing the fields you're asking about are "level design" and "environment art", maybe... Are you asking how environments are created by an artist, or asking about the systems that a programmer must create in order to support large environments?

Is the view counter broken in this forum? I cant believe noone has viewed my topic.

My guess may be off, but I've noticed lately that the view count remains at 0 (regardless of actual value) until someone replies to the thread.

One method I used years ago used values in a bitmap for specific objects. It can be quite complex to set up but it does allow you to set up maps with 4.2 billion entries in it. You would have to create these maps beforehand though using specific color entries, most paint programs are pretty limited as to how many preset colors you can save so it can be a big pain. I also don't know of any game engine that would even support such a method, I did this on my own and the code has long since been lost to the winds of time. The closest method I've seen recently is in a game called Stalker for the detail mapping which uses specific colors for each detail texure it uses.

You're on the money with the term "environment art" as that's the position that usually does all the level creation: your Environment Artist. Sometimes they'll also create the props and models, but it's usually their job to use a limited pallette of props and buildings in as many various ways as possible.

The trick to urban layouts in particular (and I know this only addresses part of your question) is that there ARE houses and items placed randomly, they're just done so within regions that define the flow of the map. You need to focus on how you want to direct the player's movement through the level. If it's a FPS, linear kind of gameplay, then you're essentially walling in the player's track through the level (albeit not always with walls). Even if it's more of a freeform sandbox type game, you can still funnel player interest towards key points with the paths you block.

What usually helps is to visualize/draw out the path(s) you want the player to have available to them, then start planning your object placement around that.

Just went back and re-read your first post, and there's something else to keep in mind with an open game like TES or GTA. Try to start your level design with regions based on Points of Interest or themes. All the regions of a map should bump up next to eachother so you don't have 'pointless' areas, and then work in each region. Your theme and or point(s) of interest should direct the layout of that region, so if there's an important temple or cave to enter, the paths around it should try and funnel interest in that direction (you can use your basic geography for that as well).

You can also use certain props or landscape elements to block a player's view. If you can see everywhere all the time it's usually harder to keep the view from being kind of bland (and requires more resources). You'll notice on next-gen games that you're usually moving through buildings, alleyways, tunnels...they're all rooms of sorts that keep the required rendering to a smaller space (so they can throw more polygons at you with each item in there, making the "world" look much more detailed).

As for books, someone else can probably dig something up, but it seems the majority of environment-art-learning is through doing...