This post by Ascensi inspired me to try figuring the concept of the demonstrated waves system.
If I figured it right the waves are generated by moving a rigid object under the soft cloth, which is a very cool idea.
With right texture and different physics settings it can produce neat result moving series of waves.

Basically a quad mesh plane made a soft cloth (pinned at the far end) is resting on the rigid cube stretched to a little over the size of the plane.
Then there is another rigid object (wave maker) stretched across the water quad plane. This object is animated to raise and then move from back to the front creating a moving wave.
As water cloth is *settled* a bit, a wave maker is moved to the back and is ready to generate another wave.

Here is quick concept demonstration (iClone video texture and some static displacement map is used for the quad mesh plane):