As part of my recent love affair with the iPhone, I've gotten very interested in augmented reality. 
I LOVE a novel and engaging way to present data to people--it's been my job for pretty much the last 7 years, so it's really cool to see some genuine innovation in this area.

I've mentioned augmented reality once or twice before, and the buzz on it has been building lately, not many people I've talked to have heard about it yet.  So I figure I'll drop my 2 cents on the matter.

Augmented reality is simply overlaying digital displays on the real world, typically using a mobile device as the viewport.  So instead of a completely virtual world you have the real world with virtual overlays.  This video actually describes it much better than any explanation could:

Not only can this type of overlay be done on top of public areas and rooms, but you can also overlay virtual objects on well-defined spaces, such as on a piece of paper sitting on your desktop:

Augmented reality is much closer than I would have imagined even a year ago, I totally missed the significance of having direct access to a mobile video stream.  There are a few technical hurdles to application development, mostly around the speed of mobile devices, but those are being attacked and solved one by one every day.  The image processing and recognition, 3D virtual browser displays, and toolkits are now available and can be used in real applications today.

The iPhone OS isn't scheduled to support direct access to the video feed until the next release, and that's required for augmented reality apps.  (Although I understand that several of these apps are already available today on Android devices.)  I suspect that after that release hits you're going to see a flood of these applications, and I'm really looking forward to it. 

I'm looking forward to integrating the real world into my apps as well.