Augmented reality (AR) combines elements of the physical world with an interactive 3D virtual world. While the technology isn't new - think EyeToy on the PlayStation - it's now much more accessible to individual designers, and has taken off in a big way recently thanks to high-profile AR campaigns from the likes of Nike, Ford and Coca Cola.
Unlike virtual reality, AR doesn't seek to replace our physical world, but add to - or augment - our reality. There are two main applications of this. Firstly, you can project an interactive digital interface onto a pair of translucent glasses, turning you into a real-world version of Schwarzenegger's Terminator. Clearly this approach has various military applications, not to mention fully immersive gaming experiences.