There's a reason the Kinect requires so much clearance -- it's better at picking up wildly swinging arms than subtle hand movements. The Displair interface, however, can pick up on even the smallest twitches. Welcome to your Minority Report future.
The Displair was build by Maxim Kamanin and projects an image, either video or still, onto a "curtain" of cold fog. As the user interacts with that image, his hand gestures are picked up by an infrared camera and interpreted by the system. This prototype system picks up hand movements as small as 1cm -- more accurate than a Kinect, though with a slightly longer lag time than the Microsoft device. The increased accuracy of the Displair allows users to forgo the sweeping arm and leg movements that Kinects require and instead, make smaller swipes with their hands.
The company hopes to build this technology into displays as large as 140 inches for advertising, home entertainment and even potentially medical uses. That is assuming, however, that this dorm room-developed touchscreen company can find sufficient financial backing. [TechCrunch via Electronista]