Correct; it goes into the compute terrain, but you can do anything before the compute terrain. But remember that the displacement you need for the water masks would be the terrain under water. So if you want some strata, e.g. but only above a certain level above the sea, you don't really need to take the line from there into the blue node. Another thing you may have noticed is the stretched Y; if you don't do that, the coastal mask may turn out differently, just play with it and see what happens. The colors of the color adjust reflect the heights between which the surf or coastal calm may occur, further apart and you get softer edges. Play with these and you'll see what changes. For a wind effect, you could even transform/move the mask to one side, so a large mountain range, or steep area of coast may have a broader coastal area, etc, etc.
