For someone who has done zero 3D graphics in a couple of decades, why do displacement maps exist? At first blush they don't appear to be more computationally efficient than more complex geometry.
Displacement maps can closely approximate the geometric detail of having 1 triangle per pixel. All the work for displacement maps happens on a per-pixel basis inside a fragment shader (in simple terms, a little program that runs for each pixel of a triangle). You can wrap this displacement map over a single, large triangle and get the visual appearance of a much denser mesh.
The alternative approach of subdividing the mesh is orders of magnitude less efficient because GPUs are _very_ bad at drawing tiny polygons. It's just how GPUs and the graphics pipelines are implemented. A 'tiny polygon' is determined from how many pixels it covers, as you start dropping below a couple dozen pixels per triangle you start hitting nasty performance cliffs inside the GPU because of the specific ways triangles are drawn. Displacement maps works around this problem because you're logically only drawing single big polygons but doing the work in a shader where the GPU is much more efficient.
I think you're wrong here... Can you provide an example of an engine where this is actually the case? To my knowledge (and I checked on Wikipedia [1] to make sure), a displacement map simply displaces VERTICES along their normals (so white color moves a maximum distance along normal, and black either doesn't move at all or moves maximum distance along the inverted normal - inwards). This means you need to heavily subdivide your geometry. Or you can remesh your geometry, with the simplest remeshing algorithms being just voxelizers - and that's what we see the OP doing - except in the place where all the 3D graphics complain on the limitation of voxelization, he hypes it as this new retro look he invented.
What seems to confirm my interpretation of all of this is how the OP describes this being done on the CPU, and - while he tries to downplay it - using rather decent hardware - I mean, Steam Deck is not exactly ancient hardware, and for an extremely simple scene with nothing else going on, he's happy being above 60 FPS on 800p resolution!
On the other hand, UE5's Nanite achieves the same LOD scaling but far better, without the limitation of not being able to scale down past the base mesh and with a built-in workaround for the issues GPUs have with small triangles. It's possible that people might use displacement maps in the authoring process, which can then be baked into static meshes for Nanite. Then it would just be a convenient-ish way for artists to author and distribute complex materials.
If you do your tesselation inside the vertex shader, then you can send a low-poly mesh to the graphics card, which saves a lot on vertex buffers (e.g. uv coordinates and other per-vertex attributes). The vertex shader still emits the same number of vertices to the rest of the pipeline, but inter-stage bandwidth is more plentiful than CPU-GPU bandwidth so I can see that coming out ahead.
I’m not an expert though. Perhaps someone with a better understanding can clear this up, I’m curious too…