The display URL is the URL that search engine users see in a PPC ad. The display URL may differ from the destination URL.

The display URL helps users to anticipate the content of the landing page they are taken to. This explains why Google requires your display URL to be similar to your destination URL, but both urls do not have to be identical.

Customers are more likely to click on your PPC ad if the display URL cleary states what your company sell or offers. Optimizing your display URL is one of the techniques to improve your Adwords account click-through rate.

The display URL appears in green in the last line of your PPC ad.

UPDATE: Google has made recent changes to how destination and display URLs work in AdWords. Learn more here.