Damaging terrain, such as lava, causes a champion damage when the champion passes through. Note that large champions take the same amount of damage per move regardless of how many squares pass through the terrain. (Note that damaging terrain may also be impeding.)
In addition, damaging terrain may deal damage to any champion standing on it at the start of the champion controller's turn. Thus, using Terraform: Lava to place lava under a champion is useful against champions which are Impervious until the End of Turn, as they will take damage at the start of the next turn.