When a molecule of a dielectric material is placed in an electric field, the molecule acquires an electric dipole moment. Why?
Dielectric and dipole
atomic-physicsdielectricdipoleelectric-fieldsmolecules
Related Solutions
The electric field means that the potential energy of the polar molecule depends on it's angle relative to the field and is given by:
$$ V(\theta) = -p E \cos\theta $$
where $p$ is the dipole, $E$ is the field strength and $\theta$ is the angle the dipole makes to the field lines. Obviously this has a minimum when the dipole is aligned with the field, so all else being equal the molecules will line up with the field.
However at any temperature greater than absolute zero there will be some thermal motion of the molecules, and interactions between molecules will randomly perturb the molecules away from their minimum energy conformation. The size of these perturbations is around $kT$ (per molecule), so if $kT$ is comparable with $2pE$ it will disrupt the alignment of the polar molecules and at temperatures significantly above $2pE/k$ the alignment will be lost completely. This means that generally speaking the dielectric constant will fall with increasing temperature.
A displacement field is produced by the polarization of a dielectric. A displacement current is produced by a time-varying electric field.
The two concepts are completely different. A displacement field does not cause displacement current, and a displacement current is not affected by displacement field.
There is no displacement current in a dielectric with a steady electric field because a displacement current is produced by a time-varying electric field, not a steady one. There is a displacement current in free space produced by a time-varying electric field because if there's a time-varying electric field, then there's a displacement current.
Although the two concepts are completely different, they do both have "displacement" in their name, which as CuriousOne mentioned is quite confusing. Furthermore, a displacement current isn't an actual current, with charges moving around and all that; it just has an associated magnetic field as if it were a real current. Hopefully that clears things up.
Best Answer
An atom may be neutral as a whole but its parts aren't. The electric field applies opposite forces to the negatively-charged electron cloud and the positively-charged nucleus, resulting in a net separation of charge. This results in a dipole moment.
This is covered in section 4.1.2 of Griffiths' Introduction to Electrodynamics.