Displacement is defined as the difference between the starting and ending points, and there is no universal formula for calculating it as it varies by problem. For example, in a scenario involving a taxi driver who travels south and then east, the displacement can be determined using the hypotenuse of a right triangle. Alternatively, if velocity and time are known, displacement can be calculated using the formula d = v * t. The discussion emphasizes that the approach to finding displacement depends on the specific context of the problem. Understanding these concepts allows for various methods to calculate displacement accurately.