We describe fundamental energy dissipation in dynamic nanoscale processes in terms of the localization of the interactions. In this respect, the areal density of the energy dissipated per cycle and the effective area of interaction in which each process occurs are calculated for four elementary dissipative processes. It is the ratio between these two, which we term M, that provides information about how localized the interactions are. While our results are general, we use concepts from dynamic atomic force microscopy to describe the physical phenomenon. We show that neither the phase lag, nor the magnitude of the energy dissipated alone provide information about how dissipative processes are localized. Instead, M has to be considered. © 2011 IOP Publishing Ltd.