How does augmented reality work and is it used practically today?

[The legend]

I heard about this a few days ago and wanted to know how it works and what are the benefits?
I have tried a demo where you hold up a photograph in front of your webcam and something happens...

and also is AR in practical-use nowadays??

 

[Greg Bernhardt]

http://en.wikipedia.org/wiki/Augmented_reality

Here is a video on AR maps:
http://blog.ted.com/2010/02/13/augmentedrealit/