Rendered formulas are only available in Live Editor, whether you use displayFormula or just have standard output.
In Command Window, formulas are shown as plain old text, but the substitutions of displayFormula still do take place. E.g., here are the second and third example from the documentation:
>> S = "m*diff(y,t,t) == m*g-k*y";
>> symstr = ["'The equation of motion is'"; S;"'where k is the elastic coefficient.'"];
>> displayFormula(symstr)
The equation of motion is
m*diff(y, t, t) == m*g - k*y
where k is the elastic coefficient.
>> S = "exp(2*pi*i)";
>> symstr = "1 + S + S^2 + cos(S)";
>> displayFormula(symstr)
1 + exp(2*pi*1i) + exp(2*pi*1i)^2 + cos(exp(2*pi*1i))
Note that this last output would automatically simplify if used as a sym:
>> 1 + exp(2*sym(pi)*1i) + exp(2*sym(pi)*1i)^2 + cos(exp(2*sym(pi)*1i))
ans =
cos(1) + 3
