Recently, it was experimentally demonstrated that sputtering under normal incidence leads to the formation of spatially ordered uniform nanoscale islands or holes. Here, we show that these nanostructures have inherently nonlinear origin, first appearing when the nonlinear terms start to dominate the surface dynamics. Depending on the sign of the nonlinear terms, determined by the shape of the collision cascade, the surface can develop regular islands or holes with identical dynamical features, and while the size of these nanostructures is independent of flux and temperature, it can be modified by tuning the ion energy. (C) 2001 American Institute of Physics.