Augmented Reality (AR) is not really as futuristic as you would think. Movie directors have been doing so for years. What was a work of wonder back in the late 1990s /early 2000s has now reached your everyday smartphone. When Pokémon Go came out on the Nintendo 3DS, many people chased this imaginary yellow figure all over the world.
An Instagram Stories AR Filter is just superimposing virtual effects on top of a real-world image, creating a combined image. The most common use of filters on Instagram is the use of beauty mask for the face, such as the "Lisa and Lena" filter.
To be honest, Instagram can’t claim credit for filters. They are a near reproduction of Snapchat’s Lenses. Until recently, however, filters were created and controlled by Instagram. In May 2018, however, Instagram set up a closed beta program, allowing public figures, brands, star, and other creators to make owned filters for their audience via Facebook's Spark AR.
Brands have found this to be an excellent way to build support because people need to follow the brand (or at least visit their profile) to gain access to the filter, obtaining incredible advantages in the diffusion of the brand and its products.