To form the crater shape use a spackle (US) or polyfilla (UK), the latter being actually better as it is cellulose-based and does not shrink or warp while drying. Note that my projects that involve a lot of water-based spackling paste are usually constructed on a plywood base to prevent warping
Cover the whole thing with a PVA glue and sprinkle with fine sand:
Unpainted crater
When it is all dry, shake off excessive sand
Spray it all with a black paint
Drybrush it all with a grey paint
Glue some static grass to the base's rim
Blend the line between grass and sand with some black paint
Unpacking all the hobby accessories can take a lot of time cutting from what you can spend on the hobby. Fortunately if you are short both on space and time, you can usually still squeeze a small, permanent console table and be able to sit and hobby any time you want »
When you are building your tabletop castle you may get carried away with all the alcoves, plasterwork, gargoyles and other medieval gubbinz. Real castles were often way much simpler than that. »