Nearest Tube is an augmented reality iPhone application by UK developer acrossair. Owners of the iPhone 3Gs in London can use it to find the nearest "tube" - subway - station entrance.
Take a look at this video of the Nearest Tube application.
(Nearest Tube iPhone app video)
As you can see, the Nearest Tube application superimposes directional cues and signage on the iPhone's live picture image. Held flat, the screen actually shows the train lines underground; held vertically, you can see signposts with train station names. The functionality depends on the iPhone 3Gs GPS to determine your location, and to present appropriate images.
Although the term "augmented reality" appears to have been coined in the early 1990's by Boeing aircraft engineers, I think that The California Voodoo Game, a 1992 novel by Larry Niven and Steve Barnes, mentions DreamTime scleral contact lenses which, if I remember correctly, do actually superimpose graphic information on the scene in front of the user, making it an augmented reality display.
Science fiction authors have also been popularizing the idea and developing ideas for specific applications. For example, Charles Stross writes about overlay specs in his 2007 novel Halting State. These were used by police officers to present information gleaned from copspace, a virtual evidence warehouse, and then superimposed on the real world.
Vernor Vinge wrote about the idea at great length in his 2006 novel Rainbows End; everyone uses smart contacts (which Vinge introduced in an earlier story) to see images superimposed on the real world. In the novel, augmented reality was universal; no one had to look at plain, unvarnished reality.
You'd need to go back at least as far as Philip K. Dick's retinal vid-screen, from his 1954 story Sales Pitch to see the earliest mention of having something that projected information directly into your visual field. However, Dick was just suggesting that you could see news feeds; I don't think he suggests that you could see location-specific images superimposed on your field of vision.
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