I think people talking about AR are referring to the way gyms, stops, and monster spawns are overlaid on real world locations. Same as with the game's predeces

I think people talking about AR are referring to the way gyms, stops, and monster spawns are overlaid on real world locations. Same as with the game's predecessor, Ingress - that had no "camera overlay" elements at all, but it's pretty universally described as an AR game.