To the best of my knowledge, there are two ways that random battles were (and probably still are) handled. The first is a step counter - each time you get into a fight or leave a town, a number is generated, and the game counts down each time you take a step. When the number hits zero or becomes negative, a battle is triggered. Others probably generate a random number and check to see if it falls between a specific range of values (i.e. it's less than 0x40).

It's pretty easy to tell if your game does the first. Make an emulator savestate, and count how many steps it takes to get into a battle. Reload the state, repeat. If it's the same number three or four times in a row, try searching for that number in your emulator's cheat search function. If it turns up, freeze its location in memory and see what happens. If that works, eliminating random battles is simply a matter of setting a debugger to snap on write to that memory location, then removing either the store/decrement, or tinkering with the branch.

I dont know how it works, I know how to stop it tho.

http://www.thegshi.org/?s=v2&sys=5&gid=721

Yes in most of the DQ or DW games terrain had an effect on the encounter rate.

He shouldnt need to try and stop it now, cause that link I provided has the code to stop random battles. But sometimes that site goes down, but he'll eventually get it.