Hydrophobic effect
The hydrophobic effect is the property that non-polar molecules tend to form intermolecular aggregates in an aqueous medium and analogous intramolecular interactions.  The name arises from the combination of water in Attic Greek hydro- and for fear phobos, which describes the apparent repulsion between water and hydrocarbons.  At the macroscopic level, the hydrophobic effect is apparent when oil and water are mixed together and form separate layers or the beading of water on hydrophobic surfaces such as waxy leafs.  At the molecular level, the hydrophobic effect is an important driving force for biological structures and responsible for protein folding, protein-protein interactions, formation of lipid bilayer membranes, nucleic acid structures, and protein-small molecule interactions.
According to the solvophobic theory of Reversed Phase Chromatography (RPC), the hydrophobic effect is driven by the loss of hydrogen bonding and the higher entropic cost of forming a cavity around nonpolar molecules.  These losses can be minimized by forcing nonpolar molecules together (see Thermodynamics).

# Amphiphiles
Amphiphiles are molecules that have both hydrophobic and hydrophilic domains.  Detergents are composed of amphiphiles that allow hydrophobic molecules to be solubilized in water by forming micelles and bilayers (as in soap bubbles).  They are also important to cell membranes composed of amphiphilic phospholipids that prevent the internal aqueous environment of a cell from mixing with external water.

# Biological folding
In the case of protein folding, the hydrophobic effect is important to understand the structure of proteins that have hydrophobic amino acids, such as alanine, valine, leucine, isoleucine, phenylalanine, and methionine grouped together with the protein. Most folded proteins have a hydrophobic core in which side chain packing stabilizes the folded state, and charged or polar side chains on the solvent-exposed surface where they interact with surrounding water molecules. It is generally accepted that minimizing the number of hydrophobic side chains exposed to water is the principal driving force behind the folding process, although a recent theory has been proposed which reassesses the contributions made by hydrogen bonding.
The energetics of DNA tertiary structure assembly were determined to be primarily driven by the hydrophobic effect, as opposed to Watson-Crick base pairing (which is responsible for sequence selectivity), although there is also a significant contribution from stacking interactions between the aromatic bases.

# Thermodynamics
The transfer free energy of non-polar molecule from non-polar solvent to aqueous solvent is often used to quantify the hydrophobic effect. The transfer free energy of hydrophobic molecule, \Delta G_{\rm t}, is positive. The \Delta G_{\rm t} can be decomposed to the enthalpy component \Delta H_{\rm t} and entropy component -T\Delta S_{\rm t} by the thermodynamic relation G = H - TS. In room temperature, \Delta H_{\rm t} is approximately zero, and \Delta S_{\rm t} is negative. In other words, the hydrophobic effect is entropy-driven at room temperature. The other characteristic thermodynamic quantity of the hydrophobic effect is heat capacity change in transfer, \Delta C_{p, {\rm t}}, which has a positive value, as contrasted with a negative value in the transfer of a hydrophilic molecule.
Another way of understanding the hydrophobic effect is the example of a hydrophobic substance in water. Pure water molecules adopt a structure which maximizes entropy (S). A hydrophobic molecule will disrupt this structure and decrease entropy, and creates a 'cavity' as it is unable to interact electrostatically with the water molecules. When more than one 'cavity' is present, the surface area of disruptions is high, meaning that there are fewer free water molecules. To counter this, the water molecules push the hydrophobic molecules together and form a 'cage' structure around them which will have a smaller surface area than the total surface area of the cavities. This maximizes the amount of free water and thus the entropy. Therefore the hydrophobic effect might also be understood as the "the lipophobicity of water".