These images show 9 stages of this procedure.
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The amount of displacement at each stage can be varied, as shown here. Larger changes lead to a less-smooth surface.
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Although the terrain is colored by its altitude, other color maps can produce realistic terrain - for instance, green in the lowlands, browns for mid-altitude, and white for snowcapped peaks. Elevations below a certain level can be set to a constant value and colored, say, blue, to generate lakes and oceans. The data set can also be interpreted as a two dimensional grid of intensities - higher "altitudes" corresponding to greater densities. This grid can then be used to represent clouds.