Augmented reality has been around in one form or another for the last decade. There have been some interesting concepts but in the main they've stayed just that, concepts.
The idea behind augmented reality is to take a scene from the real world, typically via a camera, and overlay computer-generated imagery in order to 'enhance reality'. For example a recent application on the Google Android platform allows you to hold the camera up to a group of buildings and the app will overlay information about those buildings, such as what each is used for, and where they are.
There have also been some example of the use of augmented reality in gaming, although very little has made it into the commercial domain.