Ladies and Gentlemen,
I'd like to take this time to lay out some basic guidelines on the modern understanding of the nano-scale world, with the intent being to allow for more conceivably accurate usage of this category of technology in our newly appearing science fiction technology. This is not intended as a limitation, however, it is my feeling that one of the strong points of science fiction is that it does NOT have sufficiently advanced technology, except where absolutely necessary, and is thus easily within the grasp of a fertile imagination.
Let us begin with:
What is Nano-technology? While there is no official definition, there are several thresholds that may serve as such depending on the application. Most generally, however, nanotechnology is used to describe the deliberate creation of devices and material formation beneath the scale of 100 nanometers(nm). While largely arbitrary, it provides a good place to begin. How large is 100 nm - http://www.nano.gov/html/facts/The_scale_of_things.html Pretty Bloody Small. A human hair is roughly 600-1200 times as wide. 100 nm is small enough that we can start counting meaningful numbers of atoms within its 3d volume. It is one thousand hydrogen atoms laid perfectly end to end. At this scale, many things change. In the case of the individual particle, quantum physics becomes meaningful. At the bottom end of the scale, quantum physics and molecular chemistry can be expected to be absolutely dominate. Particles of this size do not stand still. They do not, technically, have positions, only probabilities. Momentum and energy remain conserved, but in ways that are unexpected and non-trivial.
While there are many, many potentially interesting applications of nanoscale technology, I will address only a few of the most immediately interesting: Nano-materials, and nano-machines.
First, I will address the nanomaterial. Again, while there is no strict definition, nanomaterials are generally considered those materials which have a 'grain size'1 of under 100 nm. Alternatively, the name can also be applied to any material where the grain size is small enough that the grain boundaries are able to make significant contributions to the behavior of the material. There are many hundreds of ways that these can be produced, from complex chemical reactions to plain old milling and grinding, creating powders of metal and ceramics to be shaped and carefully sintered like clay pots, to taking a pre-existing piece and working it to insanity, but the upshot is that both nanopowders and consolidated nanomaterials have properties that are only hinted at in their macro and microscale counterparts. They are harder and tougher, and display strange and bizarre thermal and electrical properties. Conductors become insulators... or super conductors. Catalysts become a thousand times more potent. As a bonus, metal powders become flammable, often explosively so. Nano-alloys then represent a whole new class of materials available for usage in sci-fi settings, a way to drive the materials of now into whole new categories of useful.
I shall then turn to the nano-machine, also periodically referred to as the 'nanite' in pieces of fiction. Unfortunately, the majority of fictional nanite applications are difficult to impossible to achieve under our current understanding of physics. These nanites are expected to be von Neumann machines, capable of self replication. They are expected to perform complex actions using a 'group mind' and a small handful, at most, of different types of nanites. Unfortunately, Mother Nature has already had her crack at CHON based nanites. On their own, they are neither capable of self reproduction, nor are they capable of working together to communicate. You know these basic, nature-provided nanites as 'viruses'.

Raising higher on the scale of complexity, we find the most basic of cells. We find that, again, they have surprisingly little interaction with their environment, but that our basic needs are met. The cellular-machine is capable of self-reproduction, through primarily chemical interactions. So must our nanite be. It performs a small number of, again, chemical interactions with the environment. Perhaps it is able to self-motivate. But it is 'dumb'. It does not have a group purpose, nor the ability to work in concert.

Rising once more on Nature's scale, we find more complex cells, which are uniformly larger than their simple counterparts. These cells are large enough and complex enough that they have micro-biomachines within them, energy storage devices, and so on. Here is a scale which begins to become useful, but we must again carefully consider the nature of the actions that an individual cell can take, and consider that our 'nanite' is most likely to be little more than an exceptionally sturdy cell. It is highly efficient, having none of the evolutionary hodgepodge of discarded junk. Where possible, it is made of sturdier, stronger things. An individual device may be capable of slightly more complex actions. An individual nanite may be able, for example, to act as an artificial white blood cell, using the body's own identification signals for search and destroy. It may be able to bind specific toxins and remove them from the body system. Another nanite may be able to make certain specific kinds of other nanites, though slowly.

Many traditional engineering solutions are not effective at this scale, however. Momentum at this scale is quickly and easily over powered by the thermal vibration of the object. Simple electronic and optronic devices fail under quantum effects, and require either a minimum size of approximately 20 nm per trace, or shielding made of quantum handwavium. Energy storage is most likely to be chemical in nature, or else generated as needed by a variant of a Feynman ratchet - A thought experiment device that taps local thermal vibration for energy. Solar energy may also be feasible, through a photo-synthesis like process.

The easiest 'gut check' for the ability of a nanite is this: 'Can I envision a single cell doing an activity this big?' If the answer is yes, then go for it.

1: The 'grain size' of a material refers, in general usage, to the arithmetic mean of the size of the individual crystals that make up a metal or ceramic.

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