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Tactile feedback refers to intentionally produced feedback that is perceived as movement. In most cases this movement is perceived with the touch sense on the skin. Another widely used term is Haptic technology.
Where is it used
To assist other senses
There are several possibilities for providign tactile feedback. One interesting example is the use of a Braille output device, that traces text as embossed groups of dots that can be read using the tips of your fingers. There are some quite innovative applications of this in the market. They are, of course aimed at people with sight problems, but could be used by anyone.
One very common way is to use vibration to give the user feedback in a game or other application to enhance the user experience. For example, when you shoot in a game, your game controller jerks or vibrates suddenly to give the impression of recoil. Or in a racing game the steering wheel or game controller vibrates when you go off road to simulate a bumpy ride.
In mobile devices it usual, that you can set a silent mode, where the device does not emmit a sound, but uses rythmic vibration to tell the user needs to take an action. Usually an alarm or an incoming message or phone call.
How does it work
The Braille pad example above uses retractable pins to create the Braille patterns.
Most of the Nokia mobile devices have a small eccentric rotator that creates vibration when turning at high speeds.
There are several examples around the web on how to use the vibration functionality, please use a search engine to find them out. On Forum Nokia Wiki there are examples for Flash Lite and Symbian C++