Along with the introduction of the $99 Apple TV 2 in September 2010, Apple introduced a feature called AirPlay which enabled the Apple TV 2 to serve as an output display for an iPad 2 or an iPhone 4S without any video or audio cables. This enabled device mirroring as if a digital display adaptor is connected to your device.
To use AirPlay ensure that your Apple TV and iOS devices have the latest versions of software. You'll need iOS 4.3 or later on your iPad (1 or 2), iPhone 3GS or later, or iPod Touch 2nd gen or later. You'll also need Apple TV 4.2 or later on your Apple TV. If you routinely install updates when notified by Apple then you will be fine.
Once you are set up and on the same wifi network, your iOS devices will automatically detect the presence of an available Apple TV. Video-enabled apps like Videos and YouTube will display an AirPlay icon (see right) when an Apple TV device is detected. Touch the icon and select the Apple TV device from the list to export the iOS display to the Apple TV. The AirPlay icon will then turn blue. Touch the AirPlay icon again to disable the external display (say, if you want to enter a password). This method works for any iOS device that supports video-enabled apps or full mirroring.
The other AirPlay method, available only for iPad 2 and iPhone 4S devices, enables full device mirroring. To do this, double-press the home button to display the multi-tasking bar and then swipe right. You should see something similar to the illustration below. The AirPlay icon will be displayed whenever an Apple TV 2 device is detected. Touch the AirPlay icon to enable full mirroring of the iPad 2 or iPhone 4S display. This will mirror all aspects of the display to the Apple TV device regardless of whether or not the app is video-enabled.