It's kinda inconspicuous. You have to select something from the Picture Folder list in the Screensaver control panel (not sure if you need iPhoto for this to appear). Once you select an item from that list, look underneath the preview window to the right. You'll see three small buttons which defines how the images are displayed. The 1st one crossfades between pics, the 2nd one is polaroid-like photos dropping in one after another. The 3rd is the mosaic. You'll need more than 100 photos to activate the mosaic.
