Abstract Theoretical models imply that spatial scale derives its greatest importance through interactions between density-dependent processes and spatial variation in population densities and environmental variables. Such interactions cause population dynamics on large spatial scales to differ in important ways from predictions based on measurements of population dynamics at smaller scales, a phenomenon called the scale transition. These differences can account for large-scale population stability and species coexistence. The interactions between density dependence and spatial variation that lead to the scale transition can be understood by the process of non-linear averaging, which shows how variance originating on various spatial scales contributes to large-scale population dynamics. Variance originating below the scale of density dependence contributes less to the scale transition as the spatial scale of the variation declines, while variation originating on or above the scale of density dependence contributes independently of the spatial scale of the variation.