My quote from above 

Okay, in a nutshell, according to the book:

 

"Gradient sliding- Example 1)  by sliding the greyscale gadient up or down will limit the altitude that any subsequent filters or effects will be applied to the terrain (erode, ridges, etc..,)  Say you wanted to only erode the lower altitudes of a terrain to make it look more like realistic sediment.

 

Rainbow colors- Example 2)  all this does is apply colors to the canvas and preview to make it easier to identify altitudes or areas you may be wanting to do manual brush or filter work on.

 

I can't seem to get the first example to work like I understood the book to explain but I did discover by cropping the top and bottom to a small band you can selectively apply some features like erode then move the crop brackets to their original position.This will result in the filter having been applied to the small altitude section of the terrain only. The rest of the terrain will be in its original condition.  If I discover more, I will let you know."

*I need to correct myself Example 1.  moving the gradient itself only moves the colors on the canvas and preview.  You can use this feature by selecting one of those narrow bands of rainbow colors then "gadient slide" the color to the altitude you wish to do you detailed editing.  It does nothing but move colors for more easy identification.

"Bracket cropping" up and down to to a specific altitude of your terrain, then appling certain filters will effect only that section of the terrain.  You can then move the brackets back to their original position and the rest of the terrain is unchanged.  

Sorry for the confuse information I posted earlier.