I have this:

What I am trying to achieve is something like this: Without using any textures, only plain colors. So basically smooth transitions and some shadow (using shaders). My vertex shader looks like this:

    #version 330 
    layout (location = 0) in vec3 Position;
    layout (location = 1) in vec3 Normal;
    layout (location = 2) in vec3 Color;

    out vec3 fragmentNormal;
    out vec4 ex_color,pos;
    out vec3 N;
    out vec3 v;

    void main () {
    pos= vec4(Position,1);
    ex_color = vec4(Color,1);   
    fragmentNormal = Normal;

    v = vec3(gl_ModelViewMatrix * pos);       
    N = normalize(gl_NormalMatrix * Normal);

    gl_Position = gl_ModelViewProjectionMatrix * vec4(Position,1);

I have normals for all the vertices. Color is set simply in the c++ code based on height.

Here is the fragment shader

    in vec3 N;
    in vec3 v;
    in vec4 ex_color;
    void main(void)
    {
       vec3 L = normalize(gl_LightSource[0].position.xyz - v);   
       vec4 Idiff = gl_FrontLightProduct[0].diffuse * max(dot(N,L), 0.0);  
       Idiff = clamp(Idiff, 0.0, 1.0); 
       gl_FragColor = Idiff*ex_color;
    }

So I guess my problem is what formula should I use to mix the colors. I think I don't need to set the colors in the c++ code but in the shaders.

Update: Here is the wireframe of the terrain.