What is a subtle displacement at the moment of the cut?
Subtle cuts are cuts that are blended such that you don't notice they are occurring.  They are the hardest type of cuts to pull off.  You can do them during a quick pan or if you have a near stationary scene.

The key point that Walter Murch is getting at is that jump cuts, cuts where the viewer is jarred in to noticing the cut, should generally be avoided as they break continuity.  As with any guideline, there are exceptions and in some situations you may want to intentionally jar the audience, but generally, you avoid it by either having a major change in context or angle or you blend it so smoothly that the cut is not noticeable.

For a great example of a subtle cut, look at the boat sinking sequence used frequently in the TV show Arrow (available on Netflix).  There is a shot where they go from being in a cabin there is a whoosh of water as the girl is washed out of the boat and then we are looking at a shot from outside.  While there is no clear cut, a transition was made (though in this case it could also be a total cut as there is a context shift).

You may also occasionally notice subtle cuts in documentaries when the editor is able to make a cut between takes where the speaker's head was positioned in the same spot and so you don't actually particularly notice that an edit was made.  These are only possible when the situation lends itself perfectly to such an edit, but it can sometimes be done.