With the rapid development in advanced industries, such as microelectronics and optics sectors, the functional feature size of devises/components has been decreasing from micro to nanometric, and even ACS for higher performance, smaller volume and lower energy consumption. By this time, a great many quantum structures are proposed, with not only an extreme scale of several or even single atom, but also a nearly ideal lattice structure with no material defect. It is almost no doubt that such structures play critical role in the next generation products, which shows an urgent demand for the ACSM. Laser machining is one of the most important approaches widely used in engineering and scientific research. It is high-efficient and applicable for most kinds of materials. Moreover, the processing scale covers a huge range from millimeters to nanometers, and has already touched the atomic level. Laser–material interaction mechanism, as the foundation of laser machining, determines the machining accuracy and surface quality. It becomes much more sophisticated and dominant with a decrease in processing scale, which is systematically reviewed in this article. In general, the mechanisms of laser-induced material removal are classified into ablation, CE and atomic desorption, with a decrease in the scale from above microns to angstroms. The effects of processing parameters on both fundamental material response and machined surface quality are discussed, as well as theoretical methods to simulate and understand the underlying mechanisms. Examples at nanometric to atomic scale are provided, which demonstrate the capability of laser machining in achieving the ultimate precision and becoming a promising approach to ACSM.