This covers the method described here:
http://www.theengineeringguild.co.uk/fallout-3-creating-worldspaces-the-easy-way
Which does not cover LOD (Level of Detail: distant objects) or Heightmap editing (painting in land height), it only covers "the basics" pretty much.
http://www.youtube.com/view_play_list?p=6CA8C36158924E10
Hopefully I didn't make too many errors