Applied physics is a term for physics research that combines "pure" physics with engineering. Pure physics is the study of the basic physical properties of matter, and all that derives from it, such as energy and motion. Applied physics uses this same line of investigation to solve technological problems.
It may be easy to identify research as "applied" or "pure" in cases where a direct practical application is being sought after. For instance Einstein's special theory of relativity is pure physics, and designing fiber optic technology is applied. The distinction between the two may be more blurred, however. Certainly, there is a continuum of research topics along the spectrum between applied and pure. But to be considered applied, the research must at least be concerned with the potential technological or practical applications of their research, if not directly engaged in solving an engineering problem.
Applied physics research may be concerned with developing instrumentation for scientific research. Indeed, much of the instrumentation used by physics researchers is so advanced that it is custom built by the researchers themselves. High-energy physicists working on particle accelerators like the European Organization for Nuclear Research (CERN) are a good example of physicists who build their own instrumentation.
Applied physics, as an academic discipline, is a relatively new invention with a somewhat small number of universities having departments in the field. Often, a department of applied physics will draw faculty from the physics department and engineering departments of a university. It is common for the faculty to hold joint appointments in more than one department. There is a growing trend towards interdisciplinary research in all scientific fields, and the formalized overlap of engineering and physics research in the form of physics departments at universities is symptomatic of this trend.
There are a wide variety of research topics that may be considered to be applied physics. One example is the development of superconductors. A superconductor is a material that will conduct electricity without resistance below a certain temperature. Superconducting magnets are essential for the function of magnetic resonance imaging (MRI) machines, particle accelerators, and nuclear magnetic resonance (NMR) spectrometers. Research into the physical properties and theory behind superconducting magnets would properly be considered pure physics. Attempts to build improved superconductors, and to find new applications for them would certainly be considered to be applied physics. Other well known examples of this type of research include pholtovoltaics and nanotechnology.