A head-mounted device may include a component such as a sidewall structure that is switchable between an opaque mode and a transparent mode. In the opaque mode, the component may block ambient light from passing into the interior of the head-mounted device (such that the user cannot see the surrounding environment). In the transparent mode, the component may allow ambient light to pass into the interior of the head-mounted device (such that the user can see portions of the surrounding environment). The opaque mode may provide a more immersive experience for the user of the head-mounted device, whereas the transparent mode may allow the user to see objects in their surrounding physical environment. Instead or in addition, the head-mounted device may include one or more sidewall displays.