On a campus notable for tight security and secret offices, Building 92 is a rare beacon of openness. Guests can enter without a Microsoft ID and browse corporate history in the visitor center or pop into the company store for branded water bottles, onesies, and my mom is a geek T-shirts. And yet, directly beneath them, tucked away in the basement, there is a lab so confidential that even most employees have never heard of it.

Alex Kipman flashes his badge across the access pads to a set of double doors and goes bounding down the stairs.

Over the past five years, Kipman and a team of Microsoft engineers, designers, and researchers have toiled in this windowless space to create a top-secret product that might be the company's most ambitious since the 2010 release of the motion-sensing gaming device Kinect: an augmented reality headset codenamed Project HoloLens. The device—a kind of face-computer that looks like a pair of space-age sunglasses—is a bit like the Oculus Rift virtual reality headset. But while the Rift immerses its wearers in a completely digital environment, Project HoloLens weaves digital elements into the real world—a magical merging of the virtual and physical.

Over the next couple of hours, I play a game where a character jumps around a real room, collecting coins sprinkled atop a sofa and bouncing off springs placed on the floor. I sculpt a virtual toy (a fluorescent-green snowman) that I can then produce with a 3-D printer. I collaborate with a motorcycle designer Skyping in from Spain to paint a three-dimensional fender atop a physical prototype. I traverse the surface of Mars with a NASA scientist.