@LaurenLoserThis is the BEST solution.
My ground-level building foundation is 2 steps high, so I adjusted the foundation of the basement 2 steps lower, and this flattened the ground again.
I can replicate the issue of terrain rising up to meet elevated foundations in every single lot, regardless of if I'm building from scratch or modifying.
The "build from the center out" doesn't work (or make sense) if I'm trying to put a basement only under an existing building, rather than outside it--because basements in real life where I live tend to be the core foundation of the building above it, I'm not going to put underground areas outside the building... @SimGuruNick If the basement walls are in the same grid points as the walls on the ground floor, then the terrain slopes up. It doesn't matter where I build from, such as outside the building or from inside, if the basement is in the same places. This includes when adjusting a basement to be at the same wall location as above it: I can build the basement outside the ground level building, but when I move it or resize it to match the sides of the building above, the terrain slopes up.
Lauren's adjustment of the basement using the foundation tool in the basement is the only way to get the ground flat again.
This design "feature" has been driving me absolutely insane since the terrain update, because I hate having the house on level ground and it was so weird to me to have a basement outside the building, or to have it just smaller than the building above it. I'm so glad to have finally found Lauren's workaround. I don't even notice the gap near the ceiling since I play with walls down.
ETA: Also, @BaseGameBleep has a good workaround too! This only worked for me if I built the ground level first, then the basement, then adjusted the foundation height. It didn't work if I built the ground level, raised the foundation, built a basement, lowered the foundation, then raised it again. It goes in line with the "design" of the basement matching the land height from where it starts, because when you build the basement in level ground under a building, you "set" the basement to have that ground height. It doesn't work if you decide near the end of your build to add a basement, haha.