Recent developments in the field of silicon nanostructures, particularly those properties and phenomena that are related to the photoluminescence (PL) from silicon nanostructures, have attracted much attention lately. A major source of controversy and disagreement among researchers is the underlying mechanism behind the PL. Two classes of models, i.e., the quantum confinement model that assigns the PL to quantum size effects in the nanocrystalline silicon core of the nanostructures and the surface chemistry model that assign the PL to surface phenomena at the interface between the crystalline core and the host matrix that wrap the nanostructures, are the most notable ones. In recent years, alternative structures to porous silicon, which allow synthesizing high quality silicon nanostructures with better control of their dimensionality, shape and size distribution, have emerged. In particular, fabrication techniques of silicon nanocrystals embedded in silicon-dioxide (SiO2) matrices have reached a level where consistent investigation of surface and quantum size phenomena can be performed. Recent experimental results and theories suggest that none of the above models alone can explain the entire spectrum of optical phenomena in silicon nanostructures. Instead, a refined model that takes into account the mutual role of quantum confinement and surface chemistry in shaping the optical properties of these nanostructures should be considered.