Many experiments have shown that the substrates upon which cells are placed or the extracellular matrix (ECM) in which cells reside in 3D can regulate cellular structure and function. From fate “decision making” of mesenchymal stem cells to rigidity driven durotaxis, the contractile, active acto-myosin network plays a major role in the mechanosensing and transduction of elastic signals, which in turn depends on the elastic properties of the substrate or ECM. We review experimental evidence to demonstrate that cell structure and function is regulated by its mechanical environment (the presence of other cells, external stretch, matrix rigidity) and relate that to a simple physical model that combines mechanics and cell activity. Cells that maintain a homeostasis that governs the local stress or strain in their vicinity can actively adjust their contractility to complement strains or stresses induced by other cells or other mechanical perturbations. This active response can be modeled as an “ideal” induced force that cancels out the external fields so that stress or strain homeostasis in the cell neighborhood is maintained. We propose that by actively adjusting its force to complement those of its neighbors or external perturbations and thereby maintain homeostasis, the cell senses its environment and interacts with the neighboring cells. In particular, this predicts that even circularly (spherically) symmetric cells on isotropic substrates (in isotropic ECM) interact elastically, in contrast to the vanishing interactions for the case of “dead inclusions” under these situations.  The implications of these ideas for cells in both linear and non-linear elastic media are then outlined.