The combination of photonics and silicon technology is a great challenge because of the potentiality of coupling electronics and optical functions on a single chip. Silicon nanocrystals are promising in various areas of photonics especially for light-emitting functionality and for photovoltaic cells. This review describes the recent achievements and remaining challenges of Si photonics with emphasis on the perspectives of Si nanoscale materials. Many of the results and properties can be simulated and understood based on theoretical studies. However, some of the key questions like the light-emitting mechanism are subjects of intense debates despite a remarkable progress in the recent years. Even more complex and important is to move the known experimental observations towards practical applications. The demonstrated devices and approaches are often too complex and/or have too low efficiency. However, the challenge to combine optical and electrical functions on a chip is very strong, and we expect more research activity in the field of Si nanophotonics in the future.