World Displacement (Tessellation) not work correct when you have grids and cells – tiles, bricks, stones, pavements, any rectangle draws as height map. Then only the horizontal and vertical middle grid line are calculated correct! Here is an complete example:
Increase the value of Tessellation Multiplier. You’re tessellating too little and not enough geometry is there for the heightmap you’re using to look correct. Also, disable crack free displacement as you don’t have any uv seams on that mesh and in general heightmaps which don’t change at seams don’t need it (your edges are completely black on the heightmap which means it will always align.)
Thanks to Eric Ketchum, the problem will never been in incorrect works of World Displacement (Tessellation) or in lows values of “Tessellation Multiplier” or in checked/unchecked “crack free displacement”, but in low counts of triangles/vertices of the bearing mesh.