Diminished reality is a term used to describe the control over one's reality and the ability to block out real or digital information at will. The term was coined by wearable computing pioneer Steve Mann to describe a reality that can remove, at will, certain undesired aspects of regular reality.
Diminished reality technology removes objects from video in real time and sends them back to the viewer, allowing the viewer to perceive that the objects are no longer there. Mann's billboard-blocking heads-up display, for instance, helped to diminish the reality of external messages created for advertising to the public. Steve Mann's Wearcam "allows the wearer of the special eyeglasses to pay more attention to the road. Moreover, by eliminating the need for pencil and paper, road maps, or the like, safety is improved because eyes are kept on the road at all times, rather than trying to share attention between a notepad of paper, a map, or the like". 
Mann's EyeTap device uses signal processing to detect advertisements, block them out, and replace them with text. This way, Steve Mann's reality is his own. Instead of the data on street signs being owned by someone else, he owns all of the signs around him. highlights a very important difference between augmented reality and computer mediated reality; the ability for something to be taken away from reality vs. the ability to only add to reality.
The Urban Eye Slide
Humans routinely create their own diminished reality by learning to look only at certain portions of websites or reality, intuitively blocking ads as they go throughout the world. In reality, you can be standing next to someone that you know but block them out in order to not interact with reality. Mimi Smartypant calls this concept an Urban Eye Slide, a "skill that most of us city mice have". Smartypants defines it as "the ability to scope out one's surroundings quickly but without seeming to look at anything at all. This allows one to find the open seat on a crowded train, or to move to the other side of the sidewalk well in advance of people handing out flyers or crappy free newspapers…" Going on Facebook with an ad blocker is the digital equivalent of an urban eye slide. Or going online with an adblocker that turns everything into art.
Diminished Reality Software
Researchers at Technical University of Ilmenau in Germany have developed diminished reality software that can delete an object from live, full-motion video. The software first reduces the resolution of the object, removes the image, and improves the result (similar to using a smudge tool in Photoshop), then incrementally increases the resolution, improving the result, until the original resolution is restored. To remove an object from a video, just draw an enclosed loop around it. It repeats that for each frame of the video in real time, delivering the final image in 40 ms.
- Mann, Steve. Diminished Reality. WhereCam.org. Publish date unknown. Accessed Jan 2011. http://wearcam.org/diminished_reality.htm
- Smartypants, Mimi. The World According to Mimi Smartypants. Harper Collins, 2004. Pg. 9.
- ‘Diminished reality’ software removes objects from video in real time KurzweilAI.net Published Oct 14, 2010. Accessed Jan 2011. http://www.kurzweilai.net/diminished-reality-software-removes-objects-from-video-in-real-time