A review of the foundations of the density functional theory based tight binding is given. The relation to the density functional theory as formulated by Hohenberg and Kohn is briefly sketched. The approximations that make it compatible with a tight‐binding representation are described and discussed. These approximations are densities and potentials are written as superpositions of atomic densities and potentials and many‐center terms are summarized together with nuclear repulsion energy terms in a way that they can be written as sum of pairwise repulsive terms. For small distances the nuclear repulsion dominates, whereas for large distances these terms vanish. The Kohn–Sham orbitals are expanded in a set of localized atom‐centered functions. They are represented in a minimal basis of optimized atomic orbitals of neutral atoms. The approximations lead to Hamilton and overlap matrices with only one‐ and two‐center contributions. Also, the self‐consistent charge extension, the treatment of weak interactions periodic boundary conditions, and linear response scheme for the calculation of optical properties are explained. The potential of “order‐N” treatments is critically discussed. Finally, some practical aspects, the limitations, and an outlook for improvements are presented.