This is due to the compute terrain node's patch size being set to a low number (meaning there are more sample points to define the first power fractal). Since the size of the next displacements are likely larger than this size (default is 20), they are folded in on themselves trying to match this smaller number, which creates those wierd shadow artifacts.
Its very similar to how curtains "bunch up", or crumbled paper folds in on itself.
To avoid this, you could increase the patch size to a number roughly the size of the original displacements.