I tried it out and it was very impressed by the speed and accuracy of the motion tracking (he did flicker a bit and have problems when my lights were too bright, so be prepared to work a bit to make him happy). This is a Flash implementation of augmented reality created by Digital Pictures Interactive; all it takes is your web browser, a webcam, and a printed marker symbol. Now, would it kill the little guy to smile every once in a while?!
It seems to be based on the ARToolKit developed by Dr. Hirokazu Kato of the University of Washington.
I enjoy Augmented Reality much more than Virtual Reality because 99% of the AR environment is the real world in all of its infinitely detailed glory and I can accept a few lower fidelity objects overlaid here and there. Even the highest quality VR worlds still feel much less than real in a way that usually pulls me out of the experience.