You have to complete Project K in order to unlock terraforming in ACNHBring on the music.
The final major task Tom Nook asks you to complete in Animal Crossing: New Horizons is Project K. Basically, you'll be asked to pretty up the island to accommodate a K.K. Slider concert. This is a significant effort requiring that you spend a lot of resources without much guidance. But if you can pull it off, you'll get a huge reward in the form of terraforming, which lets you shape the space to your heart's content.
Completing Project K:
Upgrading Resident Services
Inviting villagers to your island
Improving your island
Getting K.K. Slider onto your island
Unlocking terraforming
1. Upgrade Resident Services to a building and talk to Tom Nook
To get this far in the game, you must have upgraded Resident Services from a tent to a building. If you haven't done that yet, get to it! These things must be completed to upgrade Resident Services:
Upgrade your tent to a house
Invite three new villagers
Build Nook's Cranny
Build a bridge
Invite three more vill...
Source:
You have to complete Project K in order to unlock terraforming in ACNH
