Two methods are explained to exactly solve Maxwell’s equations where permittivity, permeability, and conductivity may vary in space. In the constitutive relations, retardation is regarded. If the material properties depend but on one coordinate, general solutions are derived. If the properties depend on two coordinates, geometrically restricted solutions are obtained. Applications to graded reflectors, especially to dielectric mirrors, to filters, polarizers, and to waveguides, plain and cylindrical, are indicated. New foundations for the design of optical instruments, which are centered around an axis, and for the design of invisibility cloaks, plain and spherical, are proposed. The variability of material properties makes possible effects which cannot happen in constant media, e.g. stopping the flux of electromagnetic energy without loss. As a consequence, spherical devices can be constructed which bind electromagnetic waves