Oh, I know about displacement mapping.
I'm only interested in how SP handles the height channel, because I am a beginner in SP. I know what all these do in computer graphics in general.
So in SP height is used for displacement maps? Ok that makes sense, but if you don't bake a displacement map then I guess that the height channel simply goes into the normal channel and baked into the normal map correct? Otherwise, if you don't bake a displacement map then all Height channel information is completely lost.