The incise flow tool is good for global activities when you want to do lots of damage to the terrain in a hurry. The state of the whole surface is used to compute the number of cells that can flow into each pixel and the logarithm of that result is subtracted from the altitude (result = amount * pow(flow, flowExponent) if that helps any). The results look plausible when viewed from an overhead perspective, but those little canyons tend to be far more deeply incised than would occur in the real world. For best results, it also requires a contiguous flow field, meaning that the fill basin operation is more or less mandatory with this operation. Fill basins has its own little issues that affect the character of the surface, of course; most obvious is the lack of basins following a fill basins operation.

In contrast, the precipiton tool is more of a local tool that acts globally, if that makes any sense. It's implementation is a little automaton that gets dropped onto the surface at a random point and then moves downhill, pushing a fraction of the difference in altitude to the lower altitude. For each "pass" of the filter, that little automaton gets dropped onto the surface a number of times equal to the number of pixels in the image and it plows its way downhill. It doesn't try to figure out a global state and work from there. It also doesn't care about a contiguous flow field because the automaton stops as soon as it hits a locally low spot. Like a swarm of ants eating away at the surface to get a final effect.

When to use which one? It's a matter of taste. For folks who just want a fancy-looking bump map, noise+basin fill+incise flow is probably all they need. For folks who want pretty DEMs, precipiton erosion may be all they need. I tend to use incise flow to rough out things and follow up with the precipiton operation to make the slopes a little more plausible. I have a tendency to want to use a 3D/isometric view on maps and the precipiton shader gives a more plusible result for final finishing than those deep, deep canyons.

A couple of examples that show a basic isometric view derived from the output of basic Wilbur processing are http://www.cartographersguild.com/sh...Same-Old-Thing and http://www.cartographersguild.com/sh...h-Entry-Excess