Fluorescent nanoparticles have become attractive for bioanalysis and imaging, due to their high brightness and photostability. Many different optical materials have been applied in fluorescent nanoparticles with a broad range of properties and characteristics. One appealing approach is the incorporation of molecular organic fluorophores in nanoparticles with the intention of transferring their known attractive solution-state properties directly to the nanoparticles. However, as molecular dyes are packed closely together in the nanoparticles their interactions most often result in fluorescence quenching and change in spectral properties making this approach challenging. In this perspective we will first discuss the origins of quenching and spectral shifts observed in dye based nanoparticles. On this background, we will then describe various designs of dye based NPs and how they address the challenges of dye-dye interactions and quenching. Our aim is to provide a general framework for understanding the supramolecular mechanisms that determine the photophysics of dye based nanoparticles. This framework of molecular photophysics and its relation to the internal structure of dye based nanoparticles can hopefully serve to assist rational design and optimization of new and improved dye based nanoparticles.