This research explores where the contextual reality gap emerges in social sharing of knowledge, understanding and experience generated between users (also between a designer and a user) in different contexts. It then examines how this 'contextual reality gap' can be bridged effectively in the sharing of meaning through mediated communication within emergent virtual/physical space, in what we call Blended Reality Space. As a concrete example, we refer to our current project, AGNES, developing User-sensitive Home-based Systems for Successful Ageing in a Networked Society, funded under the Ambient Assisted Living (AAL) Joint programme. Finally, we propose a conceptual framework for managing, structuring and composing contexts in designing interactive systems, a new approach we refer to as the Contextual Reality Framework.