Virtual reality, or VR, is when you’re immersed in a purely virtual world.
Playing Team Fortress 2 in an Oculus Rift would be VR.
Augmented reality, or AR, is when real reality, or RR, is enhanced with virtual images that appear to coexist with the real world.
Playing a game on a virtual chessboard that’s sitting on a real tabletop while wearing a see-through head mounted display would be AR.
Most of what I’ll say about VR today applies to AR as well.
The key commonality between VR and AR is that virtual images appear to exist in the same frame of reference as the real world.
So when you move your head, virtual images have to change correspondingly in order to appear to remain in the right place.
This tight association between the virtual world and the real world is how VR and AR differ from wearable information devices such as Google Glass. It’s far harder to keep the two worlds visually aligned than it is to just display heads-up information.