Because bump mapping only modified the surface of this geometry, while displacement mapping modifies the actual geometry. Therefore, the 3rd picture looks more realistic than the 2nd picture. However, I think that displacement mapping will have a much bigger performance cost, so game industries might prefer bump mapping.
So what exactly is the difference between bump mapping and displacement mapping? Also, do all shaders come after the texturing process? I find it interesting that the shadows on the displacement mapping seem jagged because the textures pop out much more compared too the bump mapped picture, which has a much more circular shadow.
good question - in bump mapping, you just modify the normals on the surface - the geometry doesn't actually change, while in displacement mapping, the vertices actually change. you'll probably actually be implementing these in project 4 later on, too