...are the subject of this recent review at PLoS Computational Biology (Open Access).
There are two kinds of digital paper, which mostly used are Dot Pattern and Anoto Pattern.The dot pattern is a kind of two dimensional barcode; the most common is the proprietary Anoto pattern. In the Anoto pattern, each dot is spaced about 0.3mm apart; the full pattern consists of 669,845,157,115,773,458,169 dots, and encompasses an area exceeding 4.6 million km² (this corresponds to 73 trillion sheets of letter-size paper).
The complete pattern space is divided into various domains. These domains can be used to define paper types, or to indicate the paper's purpose (for example, memo formatting, personal planners, notebook paper, Post-it notes, et cetera).
The Anoto pattern can be printed onto almost any paper, using a standard printing process of at least 600 dpi resolution (some claim a required resolution of 1000 dpi), and carbon-based black ink. The paper can be any shape or size greater than 2 mm to a side. The ink absorbs infra red light transmitted from the digital pen; the pen contains a receiver which interprets the pattern of light reflected from the paper. Other colors of ink, including non-carbon-based black, can be used to print information which will be visible to the user, and invisible to the pen.
The term "digital paper" is even more ambiguous than you pointed out, Abdul Waheed -- indeed, what I had in mind are digital collections of articles (colloquially called "papers"). I should perhaps have made that clearer. As the DOI of that article does not seem to be functional yet, here is the direct link, too.
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