I looked into this issue, it appears that 1.2 broke the way terrain bounds are calculated.
Meaning when you create a new terrain or resave an existing world entity, the terrain bounds will break.
Reproduction is as simple as it sounds, just create a terrain larger than the default bounds (~3000m) and try to move the camera beyond it.

The issue can temporarily be fixed by opening the layer file with a text editor and increasing the boundMaxs vector.
However, as I said, every time you save the layer with the world entity in it, this will break again, so before you apply the fix I would recommend moving everything else away from your default layer and locking it so you don't make changes accidentally.

Here's a detailed guide on how to fix it:

1. Make a backup of your terrain layers or project folder so you can revert any potential mistakes.
2. Open your world, check which layer contains your "world" entity (usually "default") and move all other entities from that layer to a new one. Lock the original layer with just the world entity, then save.
3. In the Workbench, browse to your world file, then to the _Layers subfolder. Open it, right click that layer and choose "Show in Explorer", showing the file in Windows.
4. Open the file with a text editor like Notepad. In there you should see something like this (I'm leaving out some parameters here):

GenericWorldEntity world {
 BSP 533 1 20 1 256 0 0 2 129 2 0 (and so on)
 boundMins -100 0 -100
 boundMaxs 100 20 100
}

If boundMins / boundMaxs are missing, add them.

5. Change the values after boundMaxs to something larger than your maximum terrain coordinates. For example, if your terrain is 8x8 km² large and the camera doesn't need to move higher than 2 kilometers, "boundMaxs 9000 2000 9000".
6. Make sure you entered everything correctly and did not break the formatting, then save the file and reload the world in the Workbench. If everything was done correctly, the bounds should have moved. If the world did not load correctly, the formatting was probably wrong.

Whenever you edit the world entity in the World Editor and save, you will have to repeat this process afterwards.

EDIT: As of 1.2.0.98, you may also have to change boundMins back to -100 0 -100!

If boundMins / boundMaxs are missing, add them.

I noticed when I opened my default file, the end } curly bracket for the

 GenericWorldEntity world {
 BSP 533 1 20 1 256 0 0 2 129 2 0 (and so on)
 boundMins -100 0 -100
 boundMaxs 100 20 100
}

Was missing and once I added that it worked for me too.

https://pastebin.com/y7f2kVK2 This is what I saw when I open that default file in notepad.

Please fix this ;(

please fix this issue asap!