0)use the Cycles renderer
1) append the material into your scene -file/append .... choose 05_materiallibrary.blend from the pack .... go to the material folder and select the desired material. hit append button on the top right to confirm.
2)apply the material to your model Go to the Material Tab of the Properties window and choose the Material from the List of Materials.
3) generate a UVMap The Material requires a UVMap which has the name UVMap. if your Model has no Map, just go to edit Mode, select all Faces or Vertices and hit U. choose an option to create the mapcoordindates, and Blender will Generate a Map called "UVMap" for you.
4)choose texture If you use a Textured Material, you can change the Texture inside the TextureTab of the properties window. In the list of Textures there are depthtexture and diffusetexture. the diffuse is your colored texture, while the depthtexture is the "depthmap" (lightness-inverted "heightmap"). deep areas should be white, flat areas should be black.
5)adjust parameters of your material. the convenient way to do so is to go to the node editor, where you get a good overview of the nodes, all at once. Be sure that the right material is selected.
-height: adjust the height value, using a depthtexture should be negative value (like -1 for example) negative values in height with a depthtexture turn out to work better in distortion, than positive values with a heighttexture. -normalfactor: the direction-factor along the surfacenormal. ("outwards") -offset: the direction-factor along a xyz direction. use a vectorinput at this slot for complex combing. -bump: a strengthvalue for the normal output which could be used in the normal inputslot of a shader. -ao: a darkening factor to darken deeper areas. -size: voronoimaterials (fur, grass and crowd) have a size value. this is the usual scalevalue of the voronoi texture. higher values make smaller dots.