The mechanics of chip formation has been revisited in order to understand functional relationships between the process and the technological parameters. This has led to the necessity of considering the chip–formation process as highly nonlinear, with complex interrelations between its dynamics and thermodynamics. In this paper a critical review of the state of the art of modelling and the experimental investigations is outlined with a view to how the nonlinear dynamics perception can help to capture the major phenomena causing instabilities (chatter) in machining operations. The paper is concluded with a case study, where stability of a milling process is investigated in detail, using an analytical model which results in an explicit relation for the stability limit. The model is very practical for the generation of the stability lobe diagrams, which is time consuming when using numerical methods. The extension of the model to the stability analysis of variable pitch cutting tools is also given. The application and verification of the method are demonstrated by several examples.