1. An augmented reality system, comprising: a user-interaction region; an image sensor arranged to capture images of a user-controlled object in the user-interaction region; a display device which is at least partially transparent and arranged to combine a displayed virtual environment with a view of the user-interaction region, such that both the virtual environment and the object are concurrently visible to a viewing user on the display device; and a processor arranged to receive the images and track movement of the object in the user-interaction region, calculate a corresponding movement within the virtual environment that is visually aligned with the movement of the object when viewed by the user on the display device, and control the display device to update the virtual environment based on the corresponding movement.