If you close in on the mud and try different settings, you'll best understand what happens. Experimentation is the basis of a good understanding. Lots of it!
You could either use the displacement tab of the surface layer (feeding some power fractal in it, of which it will use the color to displace the surface layer), or add a power fractal (PF) to the child input of the surface layer, which has its own displacement settings. You wouldn't need the color of the PF so, you could uncheck the white, and just play the displacement settings. If the smallest size of the fractal is 0.1 (=10cm) and the displacement 1 you'll get quite some spikes. Lower displacement, or lower spike limit will bring that down. Offset means the starting height of the displacement, sort of. Just check it out from a close up view is my best advice. Also try the different PF versions (ridges, perlin, billow, mix 1or mix 2). E.g. if you take a ridged perlin, and give it a negative displacement, you'll get a positively displaced billowy structure.
I hope this helps a bit.