2D Random Terrain Generation

If you want to make a square island to keep the player inside, you can paint millions of additive soft sprites at random positions and skip every sprite that touch the end of the map. Edge detection by comparing the height with 8 neighbours can be used to create erosion. This can easily be implemented using pixel shaders to make it fast.

These pages are for 3D but might give you inspiration http://malleegum.com/timspages/TerrainPages.html

JTippetts has his Accidental Noise Library available on his website and outlines some various steps that he used to generate random 2D terrain.

You can invent you algorithm easily.
Perlin noise can create initial areas -> for example forest/mountains/sea/villages.

Then you can start planting seeds for grass/trees. simulate wind for seed displacement (with care for obstacles like mountains/rivers etc.)

Pelin noise is good for lot of things, after first mountains are placed you can use erosiond and sedimentation for making canyons etc (don't know how will look with square tiles, for example removing a piece of mountain making it grassy and the put some rocks below).

For roads you can still use border of regions/areas. But a random spline is fine too!

JTippetts has his Accidental Noise Library available on his website and outlines some various steps that he used to generate random 2D terrain.

I found these journal entries of his pretty useful:

http://www.gamedev.net/blog/33/entry-2249260-procedural-islands-redux/
http://www.gamedev.net/blog/33/entry-2249282-hooking-into-the-tree-to-build-a-map/
http://www.gamedev.net/blog/33/entry-1895315-rivers/

He hasn't really updated his accidental site in awhile, though. I keep hoping he will some day. *wink wink, nudge nudge*

Thanks for all the help guys, I acutally implemented my own Perline Noise generator into a world generator. It works really well and fast too! I even went as far as to have it generate random islands too, so I can ensure that there isn't a walkable tile at the edge of the map, so the player can't "walk off" the map. Here is my post about it for more details and some pictures of the results!

Perlin Noise Terrain Generation

I'd be quite interested in that more in depth article you spoke of

If you need algorithms for perlin and simplex noise, see the glm library: http://glm.g-truc.net/api/a00148.html

I ended up using a Perlin Noise algorithm. For anyone interested I have some source code I uploaded on Google Code here, and for a little more information on what I did read my blog post about it here. Thanks for all of your help!