Augmented reality involves overlaying computer graphics onto the real world to create a 'new reality'.  It has applications in a wide range of fields, but particularly in entertainment, advertising, marketing, education, medicine and manufacturing industries, where it allows people to see and interact with virtual objects within the real world.

Undertaking projects within this field exposes students to concepts related to the way humans can interact with technology and enables them to get some insights into the possibilities that these fields might offer in the future.

You can see lots of examples here.

BuildAR is software which enables students to create simple augmented reality scenes on their desk.  To create the augmented reality experience, BuildAR tracks physical markers and draws 3D graphics on top. 

It is available for free download from the HITLab New Zealand.  http://www.hitlabnz.org/wiki/BuildAR  Working with BuildAR provides opportunities for students to extend their capabilities working with 3D graphics, video capture and image processing. 

There is an excellent tutorial for using BuildAR available at http://www.hitlabnz.org/wiki/BuildAR_Tutorial