Pathing is a new feature introduced in the Stronghold 3 editor. This is a technique where you prevent troops from traversing on part of the map. It also prevents buildings from being placed where pathing is generated.
You must path all areas which you do not want troops to travel. For example, rivers and mountains. If you do not path these out, then troops will be able to walk freely over these areas. To path out an area, hold down the control key, and left mouse button, and then move your mouse where you want to path. Hold down the right mouse button and control button to remove pathed areas.
In Stronghold Crusader 2, the ability to auto-generate pathing areas exists. To do this, go to Pathing -> Auto-Generate and check the places you'd like to block access to. There are also a lot more options available to allow you to quickly generate the areas you want to be pathed out. To do this, select one or more checkboxes on the left side of the sidebar.