Atom-atom and atom-molecule interactions in the absence or presence of an optical radiation field are among the fundamental processes in atomic, molecular, and optical physics. This review addresses recent advances that provide insight into the dynamics of many-body fipole-dipole interactions between excited atoms at long range, and the production of a transient molecule from a pair of thermal, ground state atoms by photoassociationphotoassociation at small atomic separations (<5 Å). Ultrafast pump-probe experiments have probed the dipole-dipole interactions within ensembles of excited alkali atoms by combining wavepacket (Ramsey) interferometry with a coherent nonlinear optical process. Monitoring the temporal behavior of quantum beating in the atomic species with parametric four (or six) wave mixing,four wave mixing for example, provides an in situ probe of the net interaction between two or more excited atoms, and the coherence of the nonlinear process preserves phase information. In the Fourier domain, the dipole-dipole interaction is manifested by the appearance of sidebands associated with the quantum beating frequency. Analysis of the sideband splittings observed as the mean atom-atom separation is varied suggests that n-atom ensembles (2 ≤ n ≤ 5) are detected. Quantum beating in the atomic species also serves as a sensitive detector of molecular dissociationmolecular dissociation by monitoring the approach of atomic fragmentsatomic fragments through the dipole-dipole interaction. With this new spectroscopic tool, the predissociation of electronic excited states of Rb2 and Na2 have been observed and nascent excited state distributions determined. Control of the Rb2 dissociation process so as to yield Rb fragments in a specific atomic excited state has been accomplished through varying the chirp of the pump and probe pulses. Complementary experiments on the nanosecond time scale have recorded the excitation spectra for the photoassociation of thermal pairs of ground state rare-gas-halogen atoms. Analysis of the experimental Kr-F and Xe-I photoassociative excitation spectra, acquired at ambient temperature, by coupled vibration-rotation (VR) calculations yields molecular excited state (B2 Σ+) constants more precise than those available from perturbative theoretical models or bound → free emission spectroscopy. An application of the photoassociation of thermal atomic pairs to the operation and efficiency of high temperature, metal-halide arc lamps is presented.