Why are terraces geographically important to people living in mountainous regions?

The law of gravity is "Stuff flows downhill." A terrace is a flat level place, so stuff does not flow away. That means it's a good place to grow food and stuff because the water and mud stay put. So if you want to live in the mountains, you make terraces to grow food.

Look up the words in a dictionary. You need to memorize what they mean. "Geographically" and "Machu Picchu" are only accidentally related to the subject.