AugmentedReality systems display computer-based information overlaid or in front of an ordinary visual display. This can be done by using a translucent display or by modifying the display of a digital camera. The most interesting systems will recognize objects within their field of view, and add information about those objects. For instance, one prototype system will recognize faces and display the person's name and other personal information.
AugmentedReality systems are commercially used in a few applications like mechanical maintenance and repair. The technician wears a head-mounted camera/display system, and is able to display diagrams or instructions overlaid on top of the viewed scene. (For instance, a procedure might require removing a particular part of a system. The display could display an indicator on top of the part to be removed, or surround it with a colored line.)
A minimal kind of AugmentedReality is used in the enhanced TV broadcasts of sporting events. One early use was highlighting the hockey puck in hockey games. (In an unenhanced broadcast, it can be hard to see the puck since it is small and moves very quickly.) A more recent example in (American) football is the virtual "first down" line, which is displayed as a brightly-colored virtual line on the ground. (This is a more difficult application, as the virtual line is obscured by the players, as if it was actually painted on the ground.) The 2000 A.D. New Year's CBS broadcast from TimesSquare? overlaid TimesSquare? billboards with CBS advertisements (replacing an NBC advertisement!).
A few AugmentedReality resources:
The Dark Side
Augmenting a video stream in a non-obvious way can be definitely uncool. For now, advertisers love it because the audience is less likely to get up and walk away from the show than the traditional commercial break. The canonical example is a sitcom that films someone drinking "generic-brand" cola. Then in post-production the can will be edited to be Coca Cola, Pepsi, Sprite or whatever depending on who pays most this week. Right now, modifying "reality" is an advertiser's dream, but soon all forms of video will be distrusted. Even now, the Indian government deletes military operations from satellite photos before they are released. And Stalin airbrushed out persona non grata. And doing this in real time is becoming feasible.
For another take on AugmentedReality, you can have a digital soma (ala BraveNewWorld?) that interfaces directly with your nervous system. See http://www.scifi.com/exposure/frameup/more.html for a great animation on this theme. -- SunirShah