Smoot/ Blur tool (in WrpTool)
1) Open your island and go to the area which has the "sqaure" looking elevations that you want to change.
2) Open the "Elevation Tool"
3) Select the squares that you want to smooth out (use Ctrl to select multiple points)
4) In the Elevation Tool, set "Blur" to the value you want (height in metres). 5 is a soft blur, 10 more radical, but it really depends on what your island looks like.
5) Click "Blur" - look at results in the 3D view.
6) If you are not sure as to what to put in the "Blur" box, set it at a low value (say 2 or 3), open the 3D View, and click blur, then you can see how much it smoothens out, and by how much.