One of the least publicized features in iOS 5 is the ability of the iPad 2 (and, apparently, the iPhone 4S) to wirelessly mirror its screen to a second-generation Apple TV. If both your iPad and your Apple TV are fully up-to-date, here's how you activate mirror mode.
Don't look for the controls in the Settings app on your iPad. Instead, they are snuggled next to the iPod controls. Double-press your home button to see the multitasking bar, showing all your recent apps. Swipe your finger from right to left; you'll see the AirPlay icon. Tap on that, select your Apple TV and toggle the mirror button to 'on'.
If everything is on the same Wi-Fi network, your iPad screen will appear on your Apple TV. It works well, and with a minimum of lag between the 2 devices. I checked dozens of apps, particularly games, and both sound and video made it just fine. Angry Birds looked great. So did Real Racing HD. Of course, the iPad doesn't sport a 16x9 aspect ratio, so there was black on either side of the video. On the other hand, Netflix ran in full 16x9 mode, fully sensing my wider TV screen. Of course, you can already run Netflix movies natively from the Apple TV, so there isn't much point in that exercise.
Another video app, Movie Vault also worked well. Any movies I ripped to the iPad also played just fine. The science app Solar Walk looked great. When mirroring, the renderings move to the big screen, while the controls stay on the iPad. Impressive.
Apple also sells an HDMI adapter cable to provide the iPad-to-TV link, but the wireless method is quick and easy, although the video doesn't look quite as crisp as the wired method.
iPad mirroring is not a mind-blowing feature, but it's a handy way to demo something on your iPad to a group of people, or play some games using the iPad as a controller. Slide shows and quick video replays are also made easier... and certain apps (iMovie, GarageBand) may really shine on the bigger screen.
It isn't obvious how to turn it on, but now you know; tell your friends. Give mirror mode a try and let us know how you like it.