As far as I know Ragnorak Online is a 3D game world with 2D sprites overlayed. I would like to use this style in a game I am making in Unity, so I would like the player to be able to select little square tiles on the terrain.

There are a couple routes I could take such as using a bunch of cubic polygons and linking them together or using one big map. The former approach doesn't seem to make any sense if the world is not flat as polygons wouldn't be reused often. The goal is to break down a 3D polygon into tiles which is heard to wrap my head around.

I believe using something like an interval tree or array would be appropriate to store the rectangle grid, but how would I display a rectangle around the selection the player has his mouse over on the polygon terrain itself?

Here is a screenshot. Here is a gameplay video. Here is the camera usage.