Augmented Reality (AR), Virtual Reality (VR) and Mixed Reality (MR) are all similar, but solve for different problems and offer very different experiences.
Virtual reality (VR)...
can be referred to as immersive multimedia or computer-simulated reality, replicates an environment that simulates a physical presence in places in the real world or an imagined world, allowing the user to interact in that world. - wikipedia
As an example, in this video you can watch how someone can train to be a pilot in the comfort of their own house using VR.
(Side note however - VR is a term that has entered common vernacular and can sometimes be used in a more generic way to suggestion VR or AR).
Augmented reality (AR)...
is a live, direct or indirect view of a physical, real-world environment whose elements are augmented (or supplemented) by computer-generated sensory input such as sound, video, graphics or GPS data. - wikipedia
So the distinction here is that unlike true VR where the environment is entirely simulated, in AR you are still experiencing the real world, but changes or additions have been made to it.
There are many examples of AR, but one of my favorites that shows off it's potential is this from National Geographic...
Mixed reality (MR)...
is sometimes referred to as hybrid reality - is the merging of real and virtual worlds to produce new environments and visualisations where physical and digital objects co-exist and interact in real time. - wikipedia
It's really an over complication to have MR as a term for most of today's applications
Explore Some More
For a good grounding in what's on offer, try these videos first.
- Word Lens - live translation of street signs in many languages
- Microsoft HoloLens gets less headlines today, but is amazingly impressive
- Playing with Apple's new augmented reality platform
These examples all rely on physical equipment that comes with some obvious limitations. Explore next "The Possibility of Augmented Reality Eyeballs".