1. An interactive input system, comprising: a computing structure; and an input device configured to detect at least one physical marker having a recognizable pattern thereon within a three-dimensional (3D) input space and to provide output to said computing structure, wherein said computing structure is configured to process the output of the input device to: visually recognize the pattern on the at least one physical marker in the 3D input space partially based on reference images in a pattern library; assign a tracking state to the at least one physical marker indicating a level of detection by the input device of the at least one physical marker in the 3D input space; determine digital content associated with the recognized pattern; and modify an image presented on a display surface by applying a transition to the determined digital content based on the assigned tracking state in response to movement of the at least one physical marker within the 3D input space.