DIFF finds the difference in colour between a pixel and its adjacent pixels. There are some options to choose how accurate it is (its a bit hungry on GPU processing power). Its used in the water effect to effectively calculate the force on a pixel - on the internet there are quite a few tutorials on how water is done.
I reckon probably the more obvious water effect is in Water Medusa - I can't really think of many interesting things to do with it tho'
I look forward to seeing some scenes. Any questions, just ask
- Gordon