WHAT IS DISPLACEMENT?
Unlike normal maps which is gaming related stuff, displacement is prefered method for rendering engines to put more detail on your models. I’m gonna talk about two types of displacements, normal displacement and vector displacement.
NORMAL DISPLACEMENT
Normal displacement can be done using B&W maps, where brighter areas on our texture means higher displacement and darker areas lower displacement. In some cases mesh needs to be subdivided before applying displace texture to get good result, because actual polygons on the mesh are being displaced. But this is not neccessary for modern rendering engines, where displacement is being calculated on rendering phase instead displacing actual polygons in real-time. A small example below.

DRAWBACKS
Biggest drawback of normal displacement is fact that it can displace polygons/vertices only up or down along their normals, since it uses B&W values which means up/down in this case.
BAKING DISPLACEMENT MAP
Baking process is the same as for normal maps. Basically, process is the same for baking all types of maps.
NOTE: Like normal maps, displacement maps are very sensitive to smoothing groups and proper UVs. In case you see open edges on hard edges on your mesh, it’s good idea to revise your smoothing groups and UVs and re-bake displacement map again using fixed mesh.
VECTOR DISPLACEMENT
— COMING SOON —