In contrast to most man-made machines, biological organisms are typically build from soft and often fluid-like material. How can such liquid matter be precisely controlled in space and time? To uncover the physical principles for such organization, we analyze theoretical models of biological processes using tools from statistical physics, dynamical system theory, fluid dynamics, and information theory. In particular, we study how phase separation is used to organize the liquid interior of cells and how the fluid dynamics of inhalation affects the transport of airborne odorants and the sense of smell.