We actually use CMU all of the time as retaining walls. They have to be properly reinforced and they need weep holes. Rock walls also work as retaining walls but they cost more to build and they harbor more critters. Most slopes between lots are 3 ft or shorter, but some can be 5-6 ft. Slopes can be 30 ft or more. Some lots have a steeply sloping front or side yard which is also usually terraced or turfed. You have to use a weedwhacker on a slope. Terracing gives you more usuable yard and land here costs more than the house.
We would also have the termite problem, but wood is usually treated or it is redwood, but even redwood rots. If it is a tall slope, most people terrace it. If you have to pay for a slope, you may as well make it useful. Wood is not cheap here as it has to be imported so it is not cost effective to use wood to retain anything. In a tropical climate wood would not last long.
Happy gardening in Hawaii. Gardens are where people grow.