The nonlinear interaction between light and atoms is an extensive field of study with a broad range of applications in quantum information science and condensed matter physics. Nonlinear optical phenomena occurring in cold atoms are particularly interesting because such slowly moving atoms can spatially organize into density gratings, which allows for studies involving optical interactions with structured materials. In this thesis, I describe a novel nonlinear optical effect that arises when cold atoms spatially bunch in an optical lattice. I show that employing this spatial atomic bunching provides access to a unique physical regime with reduced thresholds for nonlinear optical processes and enhanced material properties. Using this method, I observe the nonlinear optical phenomenon of transverse optical pattern formation at record-low powers. These transverse optical patterns are generated by a wave- mixing process that is mediated by the cold atomic vapor. The optical patterns are highly multimode and induce rich non-equilibrium atomic dynamics. In particular, I find that there exists a synergistic interplay between the generated optical pat- terns and the atoms, wherein the scattered fields help the atoms to self-organize into new, multimode structures that are not externally imposed on the atomic sample. These self-organized structures in turn enhance the power in the optical patterns. I provide the first detailed investigation of the motional dynamics of atoms that have self-organized in a multimode geometry. I also show that the transverse optical patterns induce Sisyphus cooling in all three spatial dimensions, which is the first observation of spontaneous three-dimensional cooling. My experiment represents a unique means by which to study nonlinear optics and non-equilibrium dynamics at ultra-low required powers.