Hey guys! Did anyone met the issue that the edge of the tiles looks so jagged after inserting an displacement texture?
burnin said everything right about 16/32 bit.
But other than that the jagged edges can be due to bad texture - sharp boundaries between white and black.
You can try smoothing the texture in Photoshop: Filter > Blur > Gaussian Blur...
However do not forget about Render Settings: Corona > Performance settings > Displacement / Screen size (px) - for example a value of 0.5 or less.