The size of material units is especially critical in manufacturing processes where thermal energy interacts with the material. The microwave energy is widely used to process the materials in industries such as food processing, chemical, manufacturing etc. due to its unique heating characteristics. In microwave processing, energy is generated and absorbed inside the material during irradiation. The energy absorbed per unit volume of the material depends upon its size. The smaller size candidate materials have more effective surface area to absorb microwave energy than the bulk ones and usually yield lesser defects. This review paper summarizes the fundamentals of size-effect, microwave–materials interaction and input/output parameters in microwave material processing. Further, size-effect in microwave processing of different type of engineering materials (metal based, ceramic based and polymer based) have been discussed in terms of energy absorption and improvement in product attributes. The challenges in microwave processing of metal based materials have been identified and opportunities have been outlined in order to improve the properties vis-à-vis particle sizes during microwave processing.