Molecular nanotechnology is the science of creating designer object by moving objects at the molecular level. The advanced vision of this is of molecular sized computers which could be turned into nanofactories. These would be able to create materials that were organized at the molecular level making them far more precise and controlled than the modern materials as well as creating machines that were far smaller than anything that can currently be made and considerably less expensive, as well.
The current level of nanotechnology is years from that point. At the current level scientists have been able to use lasers to manipulate molecules at extremely low temperatures. In this way they have created a very simple level. The next step is to make a molecular switch. This will allow scientists to control the magnetic state of a single molecule. This is minor step, but one that leads to many of the other nanotechnology possibilities.
One of the possibilities for future molecular nanotechnology are smart materials. Smart materials are any material engineered at the nonometer size and has a specific task. This could lead to material that could change shape, react to specific molecules very specifically and even repair damage to itself. The most basic of these technologies are beginning now with ideas like carbon nanotubes, which are far stronger than diamonds.
One of the most useful of the smart materials could be the nanosensor. These would be small parts of a larger nanomachine that reacted to specific cues in the environment. This could let it record something like light and turn on a light when it got dark. Another possibility is having material that changes structure when it reacts to electricity. This could create objects that alter their shape or form - for example, a flexible pole that can be made solid with a very small electrical shock.
The most exciting possibility of nanotechnology is that of self-replicating nanotechnology. In this way you could create an object that could repair itself in a much more dramatic fashion, or tiny machines that could pass through the walls of cells and fight viruses or even alter genetics. Because they replicate, you could create nanotechnology vaccines with few, if any, side effects, or simply produce large amounts of material very inexpensively by growing it rather than creating it.
Molecular nanotechnology has the potential to create computers magnitudes of order more powerful than what exists which could reproduce itself, enter into the human body and even create clouds of material which could be shaped into anything from a simple chair to complex computers. If it can be made to work, it could replace the entire manufacturing base with something considerably less expensive and far more precise than our current system.