We present an overview of the recent progress that has been made in understanding the origin of hydrophobic interactions. We discuss the different character of the solvation behaviour of apolar solutes at small and large length scales. We emphasize that the crossover in the solvation behaviour arises from a collective effect, which means that implicit solvent models should be used with care. We then discuss a recently developed explicit solvent model, in which the solvent is not described at the atomic level, but rather at the level of a density field. The model is based upon a lattice-gas model, which describes density fluctuations in the solvent at large length scales, and a Gaussian model, which describes density fluctuations at smaller length scales. By integrating out the small-length-scale field, a Hamiltonian is obtained, which is a function of the binary, large-length-scale field only. This makes it possible to simulate much larger systems than was hitherto possible as demonstrated by the application of the model to the collapse of an ideal hydrophobic polymer. The results show that the collapse is dominated by the dynamics of the solvent, in particular the formation of a vapour bubble of critical size. Implications of these findings for the understanding of pressure denaturation of proteins are discussed.