Displacement Modifier

The Displacement Modifier essentially takes a texture, and applies its luminance as mesh sculptor.  It has a much greater effect on the mesh than does normal mapping, and it's strength can be controlled in real time.

As with any type of sculpting or smooth mesh contouring, a decent number of polygons are needed, so we'll Sub-Surf a cube for this example.

First create a texture which has the likeness of a normal map.  Note that when creating this textures, uncheck them in the list so that they do not apply to the mesh as a texture.  Adjust the Size to get the right scale of the texture to be applied.  In this case, there are two textures being generated from the same (cloud) image.  The only difference between them is size.

After creating the textures, add the Displacement Modifier to the mesh, and assign the texture from the list of textures. Note how the texture now affects the geometry of the mesh.  The strength of the effect can be controlled with the Strength slider.

Now with both Displacement Modifiers (big and small) applied, the smooth cube now has some significant ridges and bumps from the two modifiers.

Note also that this modifier can be applied to a part of a mesh rather than the whole thing by using Vertex Groups.  

In this way you can have much more sophisticated mesh manipulation.