During field-scale simulations of miscible displacements, the effect of heterogeneity-induced channelling is always accounted for, while micro-scale physical instabilities like viscous fingering and molecular diffusion are ignored due to the computational costs of the required fine-grid simulations. Thus, the interplay between small- and macro-scale physical instabilities is not properly understood. In this study, we examined the interactions of the small- and macro-scale effects during miscible CO2 displacements using two-dimensional, inter-well scale, fine-grid models. Using the linear stability theory, we described the fingering behaviours of a set of homogeneous models which were perturbated initially to artificially seed different forms of fingers. We also attempted to identify the range of permeability variation in a set of heterogeneous models at which the effect of viscous fingering or physical diffusion diminishes, and the permeability heterogeneity dominates the process. Our results showed that in models with little or no heterogeneity, viscosity fingering, and physical diffusion exerted control on the dynamics of the flooding process. However, as the degree of heterogeneity increased, the influence of viscous fingering and diffusion diminished, with a corresponding increase in the influence of permeability heterogeneity/variation. Overall, during miscible displacements, oil recovery and CO2 storage were improved because of the interactions of diffusive forces, viscous fingering and/or reservoir heterogeneity.