Mark Frauenfelder writes at BoingBoing:

The most exciting mobile application for magnetic sensors is the capability to map an online "Yellow Pages" on top of the real world, allowing users to point their phones in the direction of a building or other public area and get information about it. For example, say you're driving down the street and see a bookstore you'd like to visit later. You could simply point your phone at the store and press a button on your phone, sending the GPS coordinates and direction information to a service that returns the operating hours and additional information about the store, along with a coupon for 10% off your purchase. If you point it at a restaurant, you could get the Zagat rating, the menu and the opportunity to make a reservation.

He wrote a whole article for The Feature on the subject.

If you broaden this use case to not only display static information about the store, but give the store the ability to send actual software code to you that, securely, runs on your mobile device, then that's exactly what we mean by situational software.