A UV Sphere is a better mesh to try this feature on (is made out of quads, and not trianlges like the Ico Sphere).
You need to plug the displacement texture to the displacement socket on the material output.
Render Feature set has to be in Experimental.
Displacement in the mesh section has to be set to True or Both.
To preview, you have to be in Rendered Mode in the 3D viewport. Other Shading modes will not reflect the displacement. Any changes made on the settings will not refresh in real time, you have to exit Rendered Mode (go to Solid or Wireframe Mode) and re-enter Rendered Mode to update.
The more subdivisions you have on your mesh, the more detailed the displacement, but it will also have an impact on the performance of your computer.
Remember that this is still an "experimental" feature, so expect some unexpected results...
click on the image to enlarge