Since the discovery of carbon nanotubes (CNTs), commonly referred to as ultimate reinforcement, the main purpose for fabricating CNT–ceramic matrix composites has been mainly to improve the fracture toughness and strength of the ceramic matrix materials. However, there have been many studies reporting marginal improvements or even the degradation of mechanical properties. On the other hand, those studies claiming noticeable toughening measured using indentation, which is an indirect/unreliable characterization method, have not demonstrated the responsible mechanisms applicable to the nanoscale, flexible CNTs; instead, those studies proposed those classical methods applicable to microscale fiber/whisker reinforced ceramics without showing any convincing evidence of load transfer to the CNTs. Therefore, the ability of CNTs to directly improve the macroscopic mechanical properties of structural ceramics has been strongly questioned and debated in the last ten years. In order to properly discuss the reinforcing ability (and possible mechanisms) of CNTs in a ceramic host material, there are three fundamental questions to our knowledge at both the nanoscale and macroscale levels that need to be addressed: (1) does the intrinsic load-bearing ability of CNTs change when embedded in a ceramic host matrix?; (2) when there is an intimate atomic-level interface without any chemical reaction with the matrix, could one expect any load transfer to the CNTs along with effective load bearing by them during crack propagation?; and (3) considering their nanometer-scale dimensions, flexibility and radial softness, are the CNTs able to improve the mechanical properties of the host ceramic matrix at the macroscale when individually, intimately and uniformly dispersed? If so, how? Also, what is the effect of CNT concentration in such a defect-free composite system? Here, we briefly review the recent studies addressing the above fundamental questions. In particular, we discuss the new reinforcing mechanism at the nanoscale responsible for unprecedented, simultaneous mechanical improvements and highlight the scalable processing method enabling the fabrication of defect-free CNT-concentered ceramics and CNT-graded composites with unprecedented properties. Finally, possible future directions will be briefly presented.