Terrace farming is a method of farming where the land is converted into a series of steps or terraces on the slopes of hills. This method is used in areas that have hilly or mountainous terrain. Option 1, dry regions, is not correct because terrace farming is not specifically associated with dry climates. Option 3, mountain tops, is incorrect because terrace farming is typically done on the slopes of mountains, not the mountaintops themselves. Option 4, rooftops, is also incorrect because terrace farming is not typically done on rooftops. Therefore, the correct answer is option 2, slope of hills, as this accurately describes the regions where terrace farming is commonly practiced.