There has been an increasing interest in the development of on-site and localized treatment technology for wastewater because it offers householders or a local group of householders the opportunity of reusing the wastewater after appropriate treatment. In an urban village setting the technology provides an opportunity to achieve an integrated management of the water cycle. There are, however, issues that need to be addressed. The science of wastewater treatment is well established but has been applied primarily to large-scale treatment systems. Small-scale systems have been miniatures of large-scale systems rather than the application of the scientific bases for the development of small-scale technologies. There are also issues of whether lay householders can be expected to maintain on-site or localized systems. These issues are discussed and highlighted in light of recent developments in Australia.