Without any exaggeration, cholesterol is one of the most important lipid species in eukaryotic cells. Its effects on cellular membranes and functions range from purely mechanistic to complex metabolic ones, besides which it is also a precursor of the sex hormones (steroids) and several vitamins. In this review, we discuss the biophysical effects of cholesterol on the lipid bilayer, in particular the ordering and condensing effects, concentrating on the molecular level or inter-atomic interactions perspective, starting from two-component systems and proceeding to many-component ones e.g., modeling lipid rafts. Particular attention is paid to the roles of the methyl groups in the cholesterol ring system, and their possible biological function. Although our main research methodology is computer modeling, in this review we make extensive comparisons between experiments and different modeling approaches.