If this setting is active, the Displace Deformer will attempt to emulate a displacement created by the Displacement material channel. Naturally, this can only work if a material with an active Deformation channel is applied to the object to be deformed. If this option is not active, the Displace Deformer can be assigned its own texture in the Shading tab.
This settings should already be familiar to you from the normal Cinema 4D material displacement settings. Their functions are identical.
Use this value to define the height of the displacement.
See Type in the Displacement material channel.
Use this setting to define the direction in which the displacement should work. The following options are available:
The shift will take place in the direction of the vertex Normals.
The shift will take place around an imaginary sphere whose center lies within the Displace Deformer.
The shift can be made to take place in the +X, -X, +Y, -Y, +Z and -Z directions via the added Orientation setting.