"Displacements are one of the two main functions of a Power Fractal Shader. When displacement is enabled in this shader, the color information generated by the fractal are interpreted as elevations, where the high color equals maximum elevation, and the low color is the minimum elevation. Other shaders, such as the surface shader, can use this information to eventually apply structure to objects like the planet, fake stones, image maps, etc..
The elevation information is independent of the color chosen in the "Colors" tab of the Power Fractal Shader. In fact, colors can be completely disabled in the Power Fractal Shader and still displacement information is carried forward to other functions and shaders."
The above explanation is from the Terragen 2 Node Reference
In other words a greyscale fractal pattern is being used by the Power Fractal as a heightfield on the default planet object. The XZ-plane small preview to the left of the 3d preview does not show the displacement/heightfield greys of the Power Fractal. The variations in greyscale you see in that small preview are displacement shadows from a light source that seems to be permanantly directed from top left.
John
