Abstract Dynamic DNA nanotechnology often uses toehold-mediated strand displacement for controlling reaction kinetics. Although the dependence of strand displacement kinetics on toehold length has been experimentally characterized and phenomenologically modeled, detailed biophysical understanding has remained elusive. Here, we study strand displacement at multiple levels of detail, using an intuitive model of a random walk on a 1D energy landscape, a secondary structure kinetics model with single base-pair steps and a coarse-grained molecular model that incorporates 3D geometric and steric effects. Further, we experimentally investigate the thermodynamics of three-way branch migration. Two factors explain the dependence of strand displacement kinetics on toehold length: (i) the physical process by which a single step of branch migration occurs is significantly slower than the fraying of a single base pair and (ii) initiating branch migration incurs a thermodynamic penalty, not captured by state-of-the-art nearest neighbor models of DNA, due to the additional overhang it engenders at the junction. Our findings are consistent with previously measured or inferred rates for hybridization, fraying and branch migration, and they provide a biophysical explanation of strand displacement kinetics. Our work paves the way for accurate modeling of strand displacement cascades, which would facilitate the simulation and construction of more complex molecular systems.