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Freeform AE
After Effects has long had some great deformation tools for warping and bending an image in various ways, but until CS5 has had no way to warp or displace a layer in all three dimensions. The inclusion of Freeform AE, a Digieffects plug-in, changes that situation completely.
Keep in mind that until now, After Effects layers have pretty much always been "postcards in space"—they can move around in three dimensions but cannot themselves be dimensional. Freeform AE lets you deform that layer like a potato chip or displace it like a topographical map. Those two operations—deformation and displacement—can be used individually or in combination with Freeform, but either one will create real z-depth that you can see in all 3D views, including (and most importantly) from the After Effects camera.
Deformation is just like using the Mesh Warp tool in three dimensions. It operates via a user-definable grid, letting you pick a point on that grid and move it or its Bézier handles. This is the "potato chip" function. It takes a little practice to get used to how you deform an item in three dimensions, and it can be a challenge to do something precise such as an exact curve (for instance, to replace the label on a can of soda), but the resulting layer is truly curved; as the camera rotates around it, the curve reads correctly as being three-dimensional.
Displacement is a lot like what you get with the displacement mapping tools in any 3D application, where the luminance of a given pixel pushes an equivalent area of the layer upward (if brighter than mid-gray) or downward (if darker). The result is more organic and fractal-looking than with deformation; you can create topographical maps, ripple animations, and even (with a very simple geometric map) primitives and simple objects like a staircase.
Of course, the real power comes from combining the two. For example, you can create a convincing waving flag by creating the broad flapping via deformation and the fine ripples of the wind with animated displacement (see Figure 4). This feature is also good for creating flowing liquid, which has been largely out of bounds for After Effects until now. These types of animations aren't easy to make 100% convincing, but the fact that they're possible at all is only due to the inclusion of this effect.
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Figure 4 Notice that the flag is both displaced and deformed in true 3D, as can be seen in the orthogonal 3D views.