I'm not 100% sure, but I think the answer to your question is: a much better translation for English "territory" is Spanish "territorio". Both of these words carry a connotation of ownership (by a person or country). Whereas English "terrain" and Spanish "terreno" are more literally just about the physical land.
Both "la tierra" and "el terreno" can be translated as "the land", but the overall meaning of both words is somewhat different. I could be wrong about the following, but it looks to me as though "terreno" is used for smaller sections of land whereas "tierra" can refer to a larger. That is just guesswork based on reading through all of the definitions of both. Here are the links to the dictionary entries for the words:
FULL DISCLOSURE: Native English speaker - US, Southern Appalachian dialect. Other uses of English may vary. Advice about Spanish should be taken with a grain of salt.
Here is a link to an article about Spanish Short-Form Possessive Determiners (mi, tu, su, etc.): https://www.thoughtco.com/possessive-adjectives-short-form-3079109
Here is a link to terreno in a Spanish-English dictionary: http://www.spanishdict.com/translate/terreno
I hope these help. They probably explain it much better than I.
My diccionary says: su = his, its, their and her. So without any context it could be anyone of these. Moreover, for the same reason, terreno = ground, terrain, land, piece of land, piece of terrain. OH' how I hate this kind of non-sentences. It's very hard to guess what the 'teacher' wants me to answer...