Hey sarge,
To answer your question, if you open up the editor (advanced mode) and select the island etc that you want, what you need to do then is open the west/east etc selection menu and choose GAME LOGIC then in the right hand menu you should be able to see a choice of different logics to place - one should be called mist logic (i think), just place them like you would units ect and then preview it.
You will probably have to play around a little to get the desired effect but it can lag if you place to many.
This effect is also quite useful to create spooky graveyards for those people who like hunting zombies LOL
ex-para