A vector is a set of three scalars, normally representing X, Y and Z coordinates. It also commonly represents rotation, where the values are pitch, heading and bank.
Literally, to change the position of something. In graphics terminology to displace a surface is to modify its geometric (3D) structure using reference data of some kind. For example, a grayscale image might be taken as input, with black areas indicating no displacement of the surface, and white indicating maximum displacement. In Terragen 2 displacement is used to create all terrain by taking heightfield or procedural data as input and using it to displace the normally flat sphere of the planet.