Hi James,
Freestyling, yes absolutely there's is room for freestyling, so you may expect different answers here.
Officially, as far as I know, the intended modus operandi is this:
displacing shaders -> compute terrain -> non-displacing layers -> planet
So yes you are right, all shading should be done after the compute terrain. Base colours is merely there as a place holder to show you the intention of the workflow.
Some advanced users, me included, do some degree of freestyling, although admittedly I try to adhere to it as much as possible to keep things predictable.
Some even ignore parts of this "official"workflow, but they know what they are doing and how far they can push it. Usually.
If you stick to this consensus then your shaders should align nicely with the displacements and altitude/slope restrictions should work as expected.
Of course you can use more than 1 compute terrain node and there are cases where you'd want to.
For example, adding fake stones to an already displaced terrain works best if you add those fake stones as a child of smoothed surface layer.
The smoothing uses the latest compute terrain, so you'd need one to have it work predictably. Something like this:
displacement -> compute terrain -> smoothed surface layer for fake stones -> rock colours -> grass coloursIn this case the rock and grass colours do not align anymore with the fake stones, since that is displacement
after the last compute terrain.
displacement -> compute terrain -> smoothed surface layer for fake stones -> compute terrain -> rock colours -> grass coloursAdding another compute terrain node will make sure rock and grass colours align nicely and respect the altitude/slope of the stones as well.
This will also allow for effects like intersect underlying to respect the stones, for nice "filling" of the gaps between the stones.
Of course some will say "but you can also do this and that"...and they are likely right in some cases, but to understand TG's workflow you would need to start with the intended workflow and learn from there.
I know a lot of those tricks -perhaps almost all, though no one beats Dune lol-, but I'd never recommend you to start learning TG and use tricks/cheats from scratch.
There's a nice topic going on at the moment on terrain computation and one post contains a goldmine of info from Matt, which touches on explaining this workflow.
I'll modify this post with the link.
Edit: this link is a must read:
https://planetside.co.uk/forums/index.php/topic,1249.msg12539.html#msg12539