Many small single-domain proteins undergo cooperative, switch-like folding/unfolding transitions with very low populations of intermediate, i.e., partially folded, conformations. The phenomenon of cooperative folding is not readily accounted for by common notions about driving forces for folding. I will discuss how common protein chain models with pairwise additive interactions are insufficient to account for the folding cooperativity of natural proteins, and how models with nonadditive local-nonlocal coupling may rationalize cooperative folding rates that are well correlated with native topology. The traditional formulation of folding transition states entails a macroscopic folding free energy barrier with both enthalpic and entropic components. I will explore the microscopic origins of these thermodynamic signatures in terms of conformational entropy as well as desolvation (dewetting) effects. Notably, the existence of significant enthalpic folding barriers raises fundamental questions about the validity of the funnel picture of protein folding, because such enthalpic barriers appear to imply that there are substantial uphill moves along a microscopic folding trajectory. Using results from extensive atomic simulations, I will show how the paradox can be resolved by a dramatic entropy-enthalpy compensation at the rate-limiting step of folding. In this perspective, the height of the enthalpic barrier is seen as related to the degree of cooperativity of the folding process.