The UTM tiles are just used to aid in the positioning of buildings, roads, whatever. They can't be used as the actual surface - as you say, they don't conform to the terrain.
To aid in the positioning of objects (say a house), move the UTL tile up or down until the part with the house is intersecting the grid. Then, when you place the house, place it so it aligns with the image on the UTM tile.
Does that make sense?