The name Machynlleth comes from maes (a field or plain) and Cynllaith, an old Welsh personal name. The s in maes assimilates into the c that follows: maes Cynllaith becomes Machynlleth, a phonological shift familiar to Welsh speakers and baffling to almost everyone else. Locals call the town Mach. Set in the broad Dyfi Valley at the junction of the A487 and A489, the town has been a market centre since 1291, when Edward I granted a royal charter to Owain de la Pole, Lord of Powys. Before that the Romans had built a fort called Maglona somewhere nearby and stationed troops there to keep the upland Celts in line. Before the Romans, copper was being mined in the surrounding hills as early as 2,750 years ago. The valley has been a place where roads meet for a long time.

The building on Maengwyn Street that is called Parliament House is a 15th-century townhouse, one of three surviving medieval buildings in the town. Whether it is the actual site of Glyndŵr's Parliament has been argued by historians for two centuries; the connection is traditional rather than documented. What is certain is that Glyndŵr held a council in Machynlleth in 1404, was crowned there, and assembled a coherent vision of an independent Wales that included a separate church under an archbishop at St David's, two universities (one in the north and one in the south), and recognition from foreign powers. The Pennal Letter, sent the following year to King Charles VI of France, set out the entire programme in formal terms. The original is in the Bibliothèque Nationale in Paris. The rebellion floundered after 1408. The state never materialised. But for one moment, in a small town in mid-Wales, the alternative existed in writing.

The town's most visible landmark is much newer than its medieval houses. In 1846, Mary Cornelia, heiress to the local Edwards estate, married Viscount Seaham, second son of the Marquess of Londonderry. The couple set up home at Plas Machynlleth, the estate house, and the family lived there for the next century. In 1874, to mark the 21st birthday of their eldest son Viscount Castlereagh, the townspeople paid for a clock tower on the site of the old town hall. Designed by Henry Kennedy of Bangor in a slightly Gothic style, it cost £800 - the townspeople raised £1,000, and the surplus went on planting trees. The clock tower still stands at the main crossroads, painted dark and proud, and has become the symbol of Machynlleth more reliably than the Parliament House ever has. Lord Herbert Vane-Tempest, the last family member to live at the Plas, was killed in the Abermule train collision of 1921. Plas Machynlleth was given to the town in 1948.

In 1961 a Welshwoman named Laura Ashley opened a small shop at 35 Maengwyn Street, three doors down from the Parliament House. She and her husband Bernard had been printing fabric in their flat in Pimlico; the move to Wales was meant to make their printing affordable. From that Machynlleth shop and a small factory at nearby Carno, Laura Ashley grew into one of the defining British design brands of the 1970s and 80s, with its floral cottons and Victorian-revival dresses sold worldwide. The original shop building still stands. In 1986 a former journalist named Andrew Lambert converted a disused Wesleyan chapel on the edge of town into a performing arts centre called Y Tabernacl; it expanded in 1994 into MoMA Wales, the Museum of Modern Art Cymru, which now holds the largest collection of contemporary Welsh art in the country. Machynlleth, in other words, has produced more than its share of cultural infrastructure for a town of 2,235 people.

Three miles north of town, in a disused slate quarry above the Dulas valley, the Centre for Alternative Technology has been experimenting with renewable energy, sustainable building, and ecological agriculture since 1973. It is now a research institute, a graduate school, and a visitor centre. In December 2019 Machynlleth Town Council became the first town council in Wales to declare a climate emergency; the year before, it had become the first to formally support Welsh independence. Each May the town fills with comedians for the Machynlleth Comedy Festival, three days of stand-up in nine venues; the comedians outnumber the chapels, briefly. April Jones, the five-year-old girl whose disappearance and murder in October 2012 drew international attention, came from here too; her memorial is on the edge of the town she was abducted from. Machynlleth carries her name as carefully as it carries Glyndŵr's. Both belong here. Both belong to Wales.