The concept of Industry 4.0, or the Fourth Industrial Revolution, has the potential for radically increased system reconfigurability and flexibility. At its core, the notion of cyber-physical system, as the new generation of embedded systems with advanced artificial intelligence and improved communication capabilities, is seen as the key enabling concept that will render production activities more sustainable. The cyber-physical conceptualization dramatically reduces the integration effort by virtually eliminating the need, time, and cost for reprogramming. However, there are still important challenges that need to be addressed before one can start to design cyber-physical production systems consistently. These intertwine and are not as easily solvable as the popular science descriptions may suggest. This paper brings them forward and develops a critical comparative analysis between today’s automation solutions and their potential cyber-physical counterparts. The analysis considers the technical and conceptual challenges that are included in the process of migrating today’s, mostly bespoke, automation solutions to highly modularized, dynamic, and interactive cyber-physical production systems (CPPSs). In this context, this paper considers the interplay between form and function of industrial components, at the light of their cyber-physical formulation. At the same time, it addresses the system-level (de)composability and interaction design challenges that arise from the integration of modular CPPSs.