Glowing Pathfinder Bugs, an interactive art project primarily aimed at children, uses projection to visualize virtual bugs on a real sandpit. The bugs are aware of their surroundings and respond to its form in their vicinity. By altering the topography of the sand, participants affect the bugs’ environment in real time, facilitating direct communication between them and computer-generated creatures.
The projected digital bugs, combined with the sand pit, gives users a really tactile, and hands-on, experience. I love how, in the video, one kid yells “kill it!” at one of the bugs — but most everyone else seems absorbed and enchanted in the experience.
A couple technical details on the project are available here.
Update: Also check out Mud Tub, by Tom Gerhardt. It’s cool, and similar — if slightly messier!