Cosolvents modulate aqueous solubility, hydrophobic interactions, and the stability and function of most proteins in the living cell. Our molecular-level understanding of cosolvent effects is incomplete, not only at the level of complex systems such as proteins, but also at the level of very fundamental interactions that underlie the hydrophobic effect. This Feature Article discusses cosolvent effects on the aqueous solubility of nonpolar solutes, hydrophobic interactions, and hydrophobic self-assembly/collapse of aqueous polymers, recently studied with molecular dynamics simulations. It is shown that direct interactions of cosolvents with nonpolar solutes and aqueous polymers can strengthen hydrophobic interactions and can contribute to stabilizing collapsed globular structures. The molecular-level explanation of these observations requires a better understanding of the entropy associated with fluctuations of attractive solute-solvent interactions and of length-scale dependencies of this quantity.