The fundamental theory of processes and properties associated with nanoscale photonics should properly account for the quantum nature of both the matter and the radiation field. A familiar example is the Casimir force, whose significant role in nanoelectromechanical systems is widely recognised; the correct representation invokes the creation of short-lived virtual photons from the vacuum. In fact, there is an extensive range of nanophotonic interactions in which virtual photon exchange plays a vital role, mediating the coupling between particles. This review surveys recent theory and applications, also exhibiting novel insights into key electrodynamic mechanisms. Examples are numerous and include: laser-induced inter-particle forces known as optical binding; non-parametric frequency-conversion processes especially in rare-earth doped materials; light-harvesting polymer materials that involve electronic energy transfer between their constituent chromophores. An assessment of these and the latest prospective applications concludes with a view on future directions of research.