displacement is basically this (from what I can remember in physics class):

if you took that engine and placed it in a tank full of water, how much water would be knocked out of the tank if it was filled to the brim.

its just a type of measurement that people base all things from: for instance: 'Y0 man, I've got like a 4.9 liter that can stomp a mud hole in your fucking 1.6 liter! faggot!"

it usually goes something like that.