From batteries to solar cells, from electronic devices to catalysts for water treatment, much of our technology relies on nanostructured materials to perform difficult tasks with high efficiency and precision. However, notwithstanding great theoretical and experimental efforts, it is still a challenge to understand and control the peculiar behavior of materials at the smallest scales, with the result that, often, materials are still optimized by trial-and-error. In this seminar I will talk about recent progress in the atomic-scale characterization of the behavior of functional materials by a combination of high-precision experiments and first-principles simulations based on density functional theory. I will also point at open problems that show how far we still are from being able to design nanostructured materials using only the basic laws of physics.