Displacement can be derived from velocity-time graphs by calculating the area under the graph. The formula for displacement is D = Vit + 1/2at^2, where Vi is the initial velocity and a is the acceleration. The velocity-time equation is v(t) = vi + at, and the area under the curve between two time points forms a right trapezoid. The area can be expressed as D = 1/2 [vi + (vi + at)] * t, simplifying to D = vit + 1/2at^2. Understanding this relationship is crucial for analyzing motion in physics.