Molecular clouds are the densest regions of gas in galaxies, in which localised gravitational collapse leads to the formation of stars. I will present an overview of the theory of how molecular clouds form in galaxies, and show how simulations demonstrate the regimes over which different theoretical models apply. I will also discuss the physics of spiral arms and how star formation and molecular clouds relate to the spiral arms in galaxies. Recent simulations show that molecular clouds appear to be largely independent of the nature of spiral arms (which fortunately means that smaller scale simulations of star formation can effectively ignore the larger scale processes such as galaxy interactions which drive spiral arms), although the properties of the molecular clouds and resulting star formation are dependent on the strength of the spiral arms. Time permitting, I will relate the local properties of the gas in galaxies, such as density and velocity field, to the resulting stellar clusters which form, again both theoretically and through numerical simulations.