The development of engineering-level models requires adoption of physical mechanisms that underlie observed phenomena. This paper reviews several cases where parameter-free, atomic-scale, quantum mechanical calculations led to the identification of specific physical mechanisms for phenomena relating to performance, reliability, radiation effects, and aging issues in microelectronics. More specifically, we review recent calculations of electron mobilities that are based on atomic-scale models of the Si-SiO2 interface and elucidate the origin of strain-induced mobility enhancement. We then review extensive work that highlights the role of hydrogen as the primary agent of reliability phenomena such as Negative Bias Temperature Instability (NBTI) and radiation effects, such as Enhanced Low Dose Radiation Sensitivity (ELDRS) and dopant deactivation. Finally, we review atomic-scale simulations of recoils induced by energetic ions in Si and SiO2. The latter provide a natural explanation for single-event gate rupture (SEGR) in terms of defects with energy levels in the SiO2 band gap.