Furthermore, placing colored caps, the phone's camera (I guess it's the phone's camera, they don't provide much information), can detect the user's gestures, enabling her to draw a circle on her wrist in order to project a watch; Creating a frame using your two hands, tells the phone to take a picture.
It's really amazing, and you must take a look at the following video:
True, carrying a projector around your neck can be considered cumbersome, but that's an amazing proof of concept. Once truly mobile projectors become cheaper, or head mounted displays become more popular, this future vision may turn to our everyday reality.
Link to Wired's report