paldav: normal maps are just a replacement for bump maps and process faster, making them a more desirable solution than bump maps for games and other such real time rendering,
it's not something that's restricted to just organics, you can use it for hard surface too (i've done that)
so you use them whenever you'd use a bump map

ctbram, those guys are using displacement maps i thought you make your normal map and then plug it into the bump mapping input of your material and change it from bump to tangent space normals or object space normals depending on the type of normal map
you don't have control over how intense the bump is though

displacement is slightly different, it's a grey scale map like bump maps but you plug them into the displacement input of the material, then you need to do a few things with some render nodes somewhere... (not the best explanation, but i've only done it once so i can't remember where everything is)

anyway, sorry for starting to take over your thread there paldav >.>
i'm quite jealous that you've pulled off something so cool as this