My Master's Project Augmented Reality is an variation of Virtual Reality. Virtual Reality uses head-mounted visors to display what the user is viewing in the virtual world.
Augmented Reality is similar, but it shows the real world, and augments it with additional displays.
Once can think of looking at the world through a glass screen, onto which can be displayed images. An application of this would be to fix one's car. By donning one of these visors, the display could lead you through the steps of the repair. Vritual arrows would show you which part of the engine you would need to manipulate. Some visors have a sensor in them that can tell their orientation and position.