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Displacement is a technique intended to add detail to the simulation during the rendering. The idea of the Phoenix displacement is similar to the usual geometry displacement: a texture is sampled, and the corresponding point on the mesh of the fluid volume or surface is shifted in a direction at a distance determined by the texture. You can plug both any V-Ray and regular , 3ds Max or Phoenix texture maps, as well as the PhoenixFD Ocean Texture. 
You can use the Phoenix FD Simulator's Mesh Preview option to check how the attached displacement map is affecting the surface when rendering a Liquid simulationMode is set to Mesh, Ocean Mesh or Cap Mesh.