ARG let you play a game in real life. Don't just pretend you are a squirrel with a sword - BE the squirrel with the sword.
For all you ARG (Alternate Reality Game) fans out there (Tom - talking to you!), Gamasutra has an interesting interview with Elan Lee, founder of 42 entertainment. Elan's outfit created The Beast and I Love Bees, amongst other gaming experiences (including NIN Year Zero effort).
What is an ARG? Elan's definition...
"...is very loose. An alternate reality game [ARG] is anything that takes your life and converts it into an entertainment space. If you look at a typical video game, it’s really about turning you into a hero; a super hero, a secret agent. It’s your ability to step outside your life and be someone else. An ARG takes those same sensibilities and applies them to your actual life. It says, what if you actually were a super hero, what if you actually were a secret agent? Instead of living in the box that’s your television or your computer, why not use your actual life as a storytelling delivery platform?"