24. An interactive display system that responds to a gesture made with an object, comprising: (a) a display surface having an interactive side on or adjacent to which an object can be placed and manipulated, and an opposite side; (b) a light source that directs light toward the opposite side of the display surface and through the display surface, to the interactive side; (c) a light sensor disposed to receive and sense light reflected back from an object through the display surface, producing a signal corresponding to an image of an object that is in contact or proximate to the display surface; (d) a processor in communication with the light sensor; and (e) a memory in communication with the processor, the memory storing data and machine instructions that cause the processor to carry out a plurality of functions, including: (i) processing the image to distinguish between touch objects physically touching the display surface and hover objects proximate to the display surface and to recognize a gesture that was made by the user using the object, said gesture being recognized in response to detecting at least one connected component within the image, said connected component comprising adjacent pixels having an intensity above a predefined threshold; and (ii) as a function of the gesture that was recognized, automatically producing a response that has previously been associated with the gesture in the memory, said response changing a state of the interactive display system.
46. The interactive display system of claim 24 , wherein the light source produces infrared light and the light sensor senses infrared light that is reflected from object.