This Reactable demo from AHNE 2008 highlights a great DIY project.
Do you think this is an instrument, though, or more of a music toy?

The Psychosynth project aims to create an interactive modular soft-synth inspired by the ideas of the Reactable.
Here’s how the Psychosynth creators describe their virtual instrument:
Our main goal is to create a free software alternative to allow newbies, developers and professionals explore new ways of making music. It is also important to build a comunity to [...]

Vision Systems Design, an engineering tech journal, has an interesting discussion on the technology behind the Reactable synthesizer interface.
The Reactable, developed by researchers at the Pompeu Fabra University, is a tangible interface for manipulating synth sounds built from an off-the-shelf camera, computer projector, PC, and a custom-built light-table.
The Reactable hardware is based on a translucent, [...]

Björk has been wowing audiences recently with her reacTable, a new music controller that uses movable blocks and a colorful video interface.
The reacTable’s developers say it is the latest in an emerging wave of “tangible music interfaces,” but to the touring musicians who play the thing, it’s merely “cool.”
“Established instruments like the Moog, the turntable [...]

At the Wall Street Journal’s D: All Things Digital conference, Microsoft Corp. CEO Steve Ballmer unveiled Microsoft Surface, the first in a new category of surface computing products from Microsoft. Surface turns a tabletop into a dynamic surface that provides interaction with all forms of digital content through gestures, touch and physical objects.
While no musical [...]

reacTIVision is an open source, cross-platform computer vision framework for fast and robust tracking of fiducial markers attached onto physical objects, as well as for multi-touch finger tracking. The Reactable applies reacTIVision to create an electro-acoustic computer music instrument with a tangible user interface.
Robert Moog played an early prototype of the Reactable at the NIME [...]

 

 Bob Moog Checks Out Reactable [2:02m]: Play Now | Play in Popup | Download

The reactable is a state-of-the-art multi-user electro-acoustic music instrument with a tabletop tangible user interface. Several simultaneous performers share complete control over the instrument by moving physical artefacts on the table surface and constructing different audio topologies in a kind of tangible modular synthesizer or graspable flow-controlled programming language.
If that sounds like a bunch of [...]