Layar is derived from location based services and works on mobile phones that include a camera, GPS and a compass. Layar is first avaliable for handsets with the Android operating system (the G1 and HTC Magic). It works as follows: Starting up the Layar application automatically activates the camera. The embedded GPS automatically knows the location of the phone and the compass determines in which direction the phone is facing. Each partner provides a set of location coordinates with relevant information which forms a digital layer. By tapping the side of the screen the user easily switches between layers. This makes Layar a new type of browser which combines digital and reality, which offers an augmented view of the world.
An iPhone version is reportedly in development. One thinks immediately of Google Street View and how that might evolve into a true "geobrowser" along these lines in the future. There are many different use cases one can imagine easily. Of course the data have to be there and accurate for the experience to be as impressive and useful as it has the potential to be.
What it also illustrates is that there are going to be many other "search" modalities on mobile phones than the conventional search field. Here's Layar in operation (click the image for the YouTube video):