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Digital paper is a type of special paper that can be written on with a digital pen to create digital copies of handwritten documents. It should not be confused with electronic paper, which is a digital way of displaying documents in a way easier to read than traditional screens. Digital paper is not currently in wide use, although technologists have long held it up as the future of writing.
Most digital paper, also known as interactive paper, works in a similar manner: the paper is imprinted with individual patterns of dots, which help a scanner in the digital pen identify exactly where the pen is on the paper. The pen then uses this information to come up with a digital picture of what is being drawn or written, which it can store internally, or transfer immediately to a computer. In this way, digital paper can be used as a replacement to normal paper, allowing people to write in the same manner they would with a traditional pen and paper, but with much more versatility as to what can be done with the final product.
It is rather ingenious itself how the digital paper works, with dots printed in an Anoto pattern around 0.3mm apart. This pattern can be printed on any paper that can take a printing of a high enough resolution, around 600 to 1000 dots per inch, and which can take a black ink. Digital paper can be as small as 2mm on each side, or as large as one wishes. The pen bounces infrared light off of the digital paper, and reads the reflection to determine where on the paper the pen was.
The Anoto pattern used is actually enormous, spanning an area roughly the size of 73 trillion sheets of normal-sized paper. This huge area is separated into different domains, which represent entirely different things, from paper type, to the purpose of the paper. So to create a sheet of digital paper, the pattern for a specific tiny chunk of this huge paper space is printed on to the sheet, which lets the pen know everything it needs to know about the paper. This can include things like buttons that can have immediate effects, based on the pen.
For example, a pattern might be printed on a sheet of paper that includes fields at the bottom for outgoing email addresses, and a button for sending. Even though this would feel like a normal piece of paper, the digital paper pattern on it would allow a special pen to use it for much more sophisticated purposes. So one could write out a letter and draw diagrams on the sheet, then write in an email address in the field, and click the send button, which would result in the entire handwritten page being sent via the pen to the recipient of the email.
Most digital paper is made by the Anoto company, and many companies use their core technology even if they have slightly differing products. One notable exception to this is the Leapfrog company, whose FLY product is entirely different. Although digital paper has been available in the marketplace since around the turn of the millennium, it is only within the past few years that it has begun to catch on in any serious way.