Intel has released pictures of test chips made with its new 45 nanometer process. For those of you keeping score at home, that means it has transitors 4-5,000 times smaller than those on the original 8088. Look at it another way: the 30,000 transistors used in that old chip can now be made to fit in the same space as 6 of the transistors actually used.
45 nanometer is apparently the second generation of Immersion Lithography, which "has its roots in the proven technology of immersion microscopy". My grandfather used oil immersion lenses on his optical microscope (he was a microbiologist) to step up the magnification to x2-3,000.