Muscle spindles are encapsulated sensory organs found in most of our muscles. Prevalent models of sensorimotor control assume the role of spindles is to reliably encode limb posture and movement. Here, I argue that the traditional view of spindles is outdated. Spindle organs can be tuned by spinal γ motor neurons that receive top-down and peripheral input, including from cutaneous afferents. A new model is presented, viewing γ motor activity as an intermediate coordinate transformation that allows multimodal information to converge on spindles, creating flexible coordinate representations at the level of the peripheral nervous system. That is, I propose that spindles play a unique overarching role in the nervous system: that of a peripheral signal-processing device that flexibly facilitates sensorimotor performance, according to task characteristics. This role is compatible with previous findings and supported by recent studies with naturalistically active humans. Such studies have so far shown that spindle tuning enables the independent preparatory control of reflex muscle stiffness, the selective extraction of information during implicit motor adaptation, and for segmental stretch reflexes to operate in joint space. Incorporation of advanced signal-processing at the periphery may well prove a critical step in the evolution of sensorimotor control theories.