Several iPhone applications now can superimpose locations of interest on the camera image - hence the term 'augmented.' In some applications, the server even examines the image from the cameraphone in real time, using that to fine-tune the user's location. It then superimposes nearby points of interest on the phone screen.
It's perhaps best illustrated in this video of finding a station in London's underground. Having traveled in London, one of the frustrations of that amazing transportation system is arriving at a station, walking up to ground level, and having no idea which direction your goal is, or even which way is which. You walk a block, re-examine your map, and realize you're 180 degrees turned around.
Do you remember in the movie 'Minority Report' the main character passes a billboard, and it calls out to him by name luring him into the store for a product he wants. There's huge potential for making money by placing a merchant's items prominently on the screen of the phone of each passerby. That's why these applications are being offered for free.
It can even be used to help align your satellite dish to known satellite positions.
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