Some engines have a lot of unused potential displacement left there for future factory improvements. Higher displacement usually improves the power output of the engine, but often causes it to only run well on higher octane gasoline.
Increase Bore
Displacement can be increased by widening the bore of the cylinder, which will also require wider pistons to match the change in cylinder size.
How to Increase Bore
In this video, Kevin Miller shows how to increase bore with a classic Van Norman 777 Boring Bar. This video was published on December 1st, 2011. This process should be followed up with a cylinder hone to provide a smoother surface.
This method is normally used to refurbish a high mileage cylinder bore, and will typically be bored to match an available set of oversized pistons. For a more substantial bore increases, the cylinder sleeves are removed, and room is made for oversized sleeves. Other considerations may need to be made, as this often reduces the coolant jacket size and can weaken the engine block.
Increase Stroke
Displacement can also be increased by replacing the engine's stock crankshaft with a larger one, which not only pushes the piston up further, but pulls it back down just as much more. Other parts that can be changed to improve compression include pistons and piston rods.