Yes you both misunderstood what terrain synthesis is.
It's much more powerful than using any sort of shaping guide currently available in World Machine.
For example in this first picture I shared
Take a better look at the end result and you can see that it cannot possibly be a result of a normal combiner or perlin shapeguide, because most of the features in the synthesized terrain are completely new.
The riverbed for example, in the synthesized result it follows the line of the user sketch but not fully, it bends and meanders just like the river in the style input, the grand canyon DEM.
Now that I read my original post I can see that it can easily be overlooked, but what terrain synthesis does is try to recreate features that look very similar to the style input, but shaped using the shape input.
An analogy would be: you go to your hair stylist and show him a picture of Brad Pitt asking for his hairstyle, he would normally go ahead and cut your hair according to the shape of your head and the type of hair you have, that's terrain synthesis, while what's currently possible in World Machine is going into photoshop, cutting out the hair of Brad Pitt and putting the cutout on your head, maybe with a 50% opacity, but it still looks ridiculous.
It's black magic to me, and it would be a gamechanger for me if it was ever implemented into World Machine.