I used to install similar systems in malls. If you stick your hand or foot between the projector and the screen, the systems sees it and can react accordingly.
One scene was a small soccer field with a ball you could kick around.
Halloween, they had an armada of spiders that would follow you.
there were water effects, over a logo that you'd disturb, and another one that was like a fogged window, but the fog was one image and you could wipe away the fog to show the 2nd image. it would fog back up after a few seconds...
at a festival called the big day out here in australia that had a sort of similar thing set up. they dressedy you up in a suit with different colours on the hands and feet, put you in front of a camera and you could control lasers connected to a giant man.