Neural oscillations and their synchronization among brain areas are associated with numerous sensory and perceptual processes, but new theories to integrate the many empirical findings are still needed. Based on a comprehensive review of animal and human literature, we probe and introduce a neurophysiological framework to explain how coordinated cross-frequency and inter-regional oscillatory cortical dynamics underlie typical and atypical brain activation, and the formation of distributed functional ensembles supporting cortical networks underpinning sensation and perception. We propose that local regional activation by an external stimulus via a sensory pathway entails (i) attenuated alpha (8-14 Hz) and increased theta (4-8 Hz) and gamma (30-50 Hz) oscillatory activity, and (ii) increased interactions among theta and gamma rhythms. These local dynamics also mediate the integration of activated neural populations into large-scale functional assemblies through neuronal synchronization. We also discuss evidence that alpha-theta-gamma dynamics emerging from thalamo-cortical and cortico-cortical interactions may be implicated in cognition across diverse contexts, and that the disruption of such processes is implicated in numerous neurological and neuropsychiatric conditions.