Abstract: In this talk I will outline the current status of our theory for galaxy formation. I will highlight recent successes from the computational astrophysics community in forming disc galaxies like the Milky Way, with an emphasis on the interplay between cosmological inflows and galactic outflows driven by exploding stars. Time permitting, I will discuss the current challenges to galaxy formation theory, arising from the smallest dwarf galaxies observed, and what this may tell us about the nature of dark matter and/or the way baryonic physics, such as stellar feedback processes, operate inside of galaxies.