Terrain generation

If you make it all out of singular objects it will absolutely cause a lot of lag. Let's say you make the terrain one big flat plane - you could remove triangles from it depending on if the player hits it, a bullet impacts it or whatever you'd like by using something like:

 mesh.triangles.RemoveAt(id);

It's very tricky but I'm sure you could find a way of using mesh deformation alongside removing triangles or vertices to achieve your effect which you would have to do research on.

Hope this helps!