The notions of hydrophobicity, hydrogen bonding and intramolecular flexibility are essential to a wide range of biological self-assembly phenomena including protein folding. The most familiar self-assembling systems comprise large, structurally complex molecules and, in the case of proteins, assembly of functional structures involves formation of so-called tertairy contacts which are widely separated in the primary sequence. Therefore detailed atomistic models of hydration and association are difficult to develop and are often controversial. Recent coordinated computational and experimental effort has focused not on biological macromolecules but on selected model systems. These (lower alcohols and minimal peptide fragments) have the virtue that they are structurally simple but may retain enough of the basic physics to make conclusions drawn from them potentially useful in wider contexts. Because of their simplicity, they can be examined in considerable detail using both experimental and atomistic simulation methods. In this review, we give an overview and comparison of experimental (neutron diffraction and optical spectroscopy) and computational conclusions leading to revised notions of hydration, hydrophobicity and thermodynamics with a focus on small aqueous amphiphiles and peptide fragments. Model systems for more complex phenomena are also introduced.