Is this the first time you have heard the name displacement mapping? Don't worry. It is just a kind of modern computer-graphics technique. Maybe you are familiar with bump mapping, which simulates bumps using a special texture map and makes the result look more realistic. Yes, it has some similar points with displacement mapping —both have a smooth surface at the beginning; both make uses of shaders for special effects; and both read data from textures working like parameter lookup tables.
Vertex displacement mapping, as the name suggests, uses textures to modify vertex positions and normals instead of just pixels. It produces dynamic, detailed, and real mesh data, not faked ones (bump mapping instead fakes the results).