It’ll work in the situations you’ve described. The TerrainExtension can be applied to the TerrainLayer or the 3DTilesLayer. The TerrainLayer uses the 2D raster data to dynamically generate 3D meshes, and your understanding is correct in that this won’t have any overhangs. As far as I know, google doesn’t offer an api for the terrain layer, but AWS hosts a free open dataset for that. 3DTilesLayer renders GLTF meshes, which can contain overhangs. I’m not sure what the overhang behavior is, but it’d probably be something like “use the highest value”. In this case, Google’s api serves 3D textured meshes rather than point clouds.

I’ll caveat that this is all pretty new to me as well, and I might be missing something.