Recently, it has become obvious that the conventional picture of the fluid lipid-bilayer component of biological membranes being a fairly structureless 'fluid mosaic' solvent is far from correct. The lipid bilayer displays distinct static and dynamic structural organization on a small scale, for example in terms of differentiated lipid domains, and evidence is accumulating that these structures are of importance for the functioning of biological membranes, including the activity of membrane-bound enzymes and receptors and morphological changes at the cell surface. Insight into the relationship between this small-scale structure and biological functioning holds promise for a more rational approach to modulate function via manipulation of the lipid microenvironment and the lipid/protein interface in particular. Computer simulation has proved to be a useful tool in investigating membrane structure on a small scale-specifically the nanometer scale (1-100 nm), which is in between the molecular scale accessible by various spectroscopic techniques and molecular dynamics calculations, and the micrometer scale accessible by scattering and microscopy techniques.