I’m sure that this will be all over the Interweb very shortly, if it isn’t already. Absolutely fantastic and really shows off the possibilities of augmented reality.
Apparently it’s test footage from an upcoming game called Star Wars Arcade: Falcon Gunner. I’d almost buy an iPod Touch just for this.
Update: I’ve been thinking about this overnight and actually, while it’s still amazingly cool, it’s not really that good a demonstration of augmented reality. The Manhattan skyline is only the background to the action and doesn’t appear to take part in the game itself. What would be very clever would be if the TIE fights could fly behind the buildings, but I don’t think that they do, unless someone has better eyesight than me.