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We demonstrate a physical model of photoalignment and photopatterning based on rotational diffusion in solid azo-dye nanolayers. We also highlight the new applications of photoalignment and photopatterning in display and photonics such as: (i) liquid crystal (LC) E-paper devices, including optically rewritable LC E-paper on flexible substrates as 3D E-paper, as well as optically rewritable technology for photonics devices; (ii) photonics LC devices, such as LC Switches, polarization controllers and polarization rotators, variable optical attenuators, LC filled photonic crystal fiber, switchable diffraction grating; (iii) patterned micro-polarizer array using photo-alignment technology for image sensor; (iv) electrically tunable liquid crystal q-plates; (v) electrically switchable liquid crystal Fresnel lens; (vi) liquid crystal optical elements with integrated Pancharatnam-Berry phases. We are sure, that in the field of (LC), the main point is no longer display research, but new photonic applications of LC are emerging in telecommunication, fiber optical communication systems, sensors, switchable lenses, LC light converters and other LC photonics devices. [ABSTRACT FROM AUTHOR]