"Augmented reality will allow Frijj customers to interact with the brand by holding up a bottle in front of a webcam to gain access to a real- time environment. A Frijj Swamp Soccerette then appears to climb out of the bottle and perform an on-screen cheer." An interesting take on commercial use of AR.
"Augmented reality is a term for a live direct or indirect view of a physical real-world environment whose elements are merged with (or augmented by) virtual computer generated imagery - creating a mixed reality." This explains AR fairly well.
"By using your Android phone's orientation sensors, we can show you a star map for your location. Explore planets, stars, constellations, and more." Sky Map uses the phone's GPS, accelerometer, and compass to create a star map specific to where the user is when they point the phone towards the sky.
Phone hacker Chris Hughes demos an open source software project that makes creating "augmented reality" a cinch. He shows how a virtual object (like a 3D spaceship), in cahoots with live footage, can interact with the real world right through a web browser.
via Chris Hughes: Augmented reality made easy | Video on TED.com.