Offline terrain is supported, but you will need a terrain dataset hosted locally. Under our terms of use, you may not download our STK World Terrain tileset for offline use.
AGI (the company that employs most of the Cesium team) has a commercial product available for generating terrain called the STK Terrain Server. You can learn more about that here: http://www.agi.com/products/stk/terrain-server/
That blog post also gave several suggestions for creating a terrain tileset.