Every thing in a 3D world are made of triangels. There are two ways to create a hex with triangles, one way uses 4 and the other 6 triangles. Normaly you would like to reduce the amount if triangles but the way that uses 6 happens to be very easy to manipulate to show hight.
Here is a picture on how the hex is divided.

The hex is made up of 7 points, 6 of these are shared with other hexes. If you put a higher level hex next to a lower level you just raise the points that they share up to the level of the higher hex, this tilts the triangles creating a slope. So then you create the terrain you do it point by point, the level of the point is the highest level of the three hexes it connects.

Here´s an example made in 3d-studio displaying how it will look.

Isometric view (not a true isometric but slightly tilted view to make clearer).

Top-down view.

Some things to note: The 7th point (central point) always are at the level the hex is supposed to be at.
The scale of the hills in the above example is correct, a hex is 30 meters across and och level is 6 meters.