Projection mapping animation has been getting more popular over the past few years. It is even being used on wedding cakes so couples can have whatever they want on the icing.
There was a performance by Heartcorps at the Sundance Film Festival using a special set where animation filled the room. Actors appear to interact with all sorts of scenarios with brilliant timing to create a seamless spectacle for the audience.
At the moment projection mapping is mainly limited to being watched and only interacted with by those who have pre-planned a routine. However, the stepping stones are very much there for fully interactive, submersive animation.