An object placed on an interactive display surface is detected and its position and orientation are determined in response to IR light that is reflected from an encoded marking on the object. Upon detecting the object on an interactive display surface, a software program produces a virtual entity or image visible through the object to perform a predefined function. For example, the object may appear to magnify text visible through the object, or to translate a word or phrase from one language to another, so that the translated word or phrase is visible through the object. When the object is moved, the virtual entity or image that is visible through the object may move with it, or can control the function being performed. A plurality of such objects can each display a portion of an image, and when correctly positioned, together will display the entire image, like a jigsaw puzzle.