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Cannot wrap my head around this paragraph in the manual.

1) What kind of terrain?

2) Does it mean a unit with no engineer devices can build those semi-permament forts in some terrain types? Or maybe there need to be engineer devices either in the unit itself or in another LCU in the same hex?

Every unit has the ability to fortify itself to a basic level (trenches). It does not require engineers in the hex.

I don't recall the specific terrain types where it is possible, but I assume those are the areas where trenches or redoubts can be built: plains, urban areas.