The key difference between VR and AR lies in the level of immersion. Virtual Reality (VR) provides a fully immersive experience, shutting out the physical world and transporting you to a new environment. Augmented Reality (AR), on the other hand, enhances the real world by overlaying digital information and images onto it. Examples of AR include Snapchat filters and Pokémon Go, which blend digital elements with real-world surroundings.