In this contribution we review the recent progress in the modeling of Pulsar
Wind Nebulae (PWN). We start with a brief overview of the relevant physical
processes in the magnetosphere, the wind-zone and the inflated nebula bubble.
Radiative signatures and particle transport processes obtained from 3D
simulations of PWN are discussed in the context of optical and X-ray
observations. We then proceed to consider particle acceleration in PWN and
elaborate on what can be learned about the particle acceleration from the
dynamical structures called "wisps" observed in the Crab nebula. We also
discuss recent observational and theoretical results of gamma-ray flares and
the inner knot of the Crab nebula, which had been proposed as the emission site
of the flares. We extend the discussion to GeV flares from binary systems in
which the pulsar wind interacts with the stellar wind from a companion star.
The chapter concludes with a discussion of solved and unsolved problems posed