I held a black-and-white square of cardboard in my hand and watched as a dragon the size of a puppy appeared on top of it and roared at me. I watched a tiny Earth orbit around a real soda can, saw virtual balls fall through a digital gap in a table, and viewed a life-sized virtual human sitting in an empty chair.

What made these impressive special effects possible was a pair of augmented reality (AR) glasses—specifically, the Wrap 920AR glasses from Vuzix. Whereas virtual reality shows you only a digital landscape, augmented reality (AR) mixes virtual information, like text or images, into your view of the real world in real-time.

In the last few years, AR has started appearing on smart phones. In that context, software superimposes information on top of your view of the world as seen through the device's screen. But AR eyewear, which provides a more immersive experience, has been confined to academic research and niche applications like medical and military training. That's been largely because older AR hardware has been so bulky and has cost tens of thousands of dollars.

The Wrap 920AR from Vuzix, based in Rochester, New York, costs $1,995—about half the price of other AR goggles with similar image resolution. The company hopes that the glasses will appeal to gamers, animators, architects, and software developers, and it has developed software for building AR environments, which is included with the glasses.

Wearing the 920AR means looking at the world through a pair of LCD video displays. The 920AR is heavier than a regular pair of glasses but far lighter than other head-mounted virtual-reality displays I've tried. The displays are connected to two video cameras that sit outside of the glasses in front of the eyes. The screens show each eye a slightly different view of the world, mimicking natural human vision, which allows for depth perception. Accelerometers, gyro sensors, and magnetometers track the direction in which the wearer is looking. The glasses also come with ports that let users plug it into an iPhone for portable power and controls, such as loading a particular AR object or environment.

The Vuzix software can recognize and track visual markers (like the black-and-white piece of cardboard I held), or lock onto a certain object or color (like the soda can). Tracking works well as long as the pattern or object being tracked are visible to the cameras; tilting a tracking pattern too far will cause the virtual image to flicker. By tracking head movements, the software can make sure that virtual objects are perfectly positioned atop the real world.

"There are other folks who make stereo, see-through eyewear, but there's no one making anything near the price point of Vuzix's," says Steve Feiner, professor of computer science at Columbia University, and a lead AR researcher since the 1990s. Feiner says that the integration of cameras and motion sensors into the display makes the glasses less bulky.