Augmented Reality is coming, and in a big way. Above is a video sent to me by a buddy in Japan using a technology called "on the fly". There is also some great augmented reality work being done on the iPhone - PointAbout profiles some of it here.
We are analog beings, which of course means we can't "see" the Internet that is swirling around us all the time, wherever we are. Think of Augmented Reality as a "sixth sense" that lets humans dip into the Internet wherever they are, either through their iPhone, or by using a regular piece of paper with markers on it, as above.
If you're like most people, you probably haven't heard much about augmented reality yet, but trust me, you soon will!