We review the rapid progress made in our understanding of the crystal prope
rties of semiconductors and nanocrystals focussing on theoretical results o
btained within the multiband effective mass approximation. A comparison wit
h experiment shows these results are valid for nanocrystals down 22-26 Angs
trom in diameter. The effect of the electron-hole Coulomb interaction on th
e optical spectra is analyzed. A theory of the quantum-size levels in wide
gap (CdSe) and narrow gap semiconductors (InAs) is presented that describes
the absorption spectra of these semiconductors well. A great enhancement o
f the electron-hole exchange interaction leads to the formation of the opti
cally forbidden Dark Exciton in nanocrystals, which strongly affects their
photoluminescence. A theory of the band-edge exciton fine structure is pres
ented and applied to the study of the PL in CdSe nanocrystals. The effect o
f doping on nanocrystal spectra is considered. The enhancement of the short
-range spin-spin interaction in Mn-doped nanocrystals leads to a giant spli
tting of the electron and hole spin sublevels.