Confined nanoscale geometry greatly influences physical transformations in materials. The electron microscope enables direct visualization of these changes. We examined the evolution of a germanium (Ge) nanowire attached to a gold (Au) nanocrystal as it was heated to 900 degrees C. The application of a carbon shell prevented changes in volume and interfacial area during the heating cycle. Au/Ge eutectic formation was visualized, occurring 15 degrees C below the bulk eutectic temperature. Capillary pressure pushed the melt into the cylindrical neck of the nanowire, and Ge crystallized in the spherical tip of the carbon shell. Solid-state diffusion down the length of the confined Ge nanowire was observed at temperatures above 700 degrees C; Au diffusion was several orders of magnitude slower than in a bulk Ge crystal.