We have talked about augmented reality before, here and here.

In Europe they are demonstrating a new augmented reality app called Layar that appears to be truly useful:

From the video description:

How it works
Layar is derived from location based services and works on mobile phones that include a camera, GPS and a compass. Layar is first avaliable for handsets with the Android operating system (the G1 and HTC Magic). It works as follows: Starting up the Layar application automatically activates the camera. The embedded GPS automatically knows the location of the phone and the compass determines in which direction the phone is facing. Each partner provides a set of location coordinates with relevant information which forms a digital layer. By tapping the side of the screen the user easily switches between layers. This makes Layar a new type of browser which combines digital and reality, which offers an augmented view of the world.

More info: Layar.eu