New images of young stars are revolutionizing our understanding of planet formation. ALMA detects large grains in planet-forming disks with few AU scale resolution and scattered light imaging with extreme adaptive optics systems reveal small grains suspended on the disks flared surfaces. Tantalizing evidence for young exoplanets is emerging from line observations of CO and H-alpha. In this white paper, we explore how even higher angular resolution can extend our understanding of the key stages of planet formation, to resolve accreting circumplanetary disks themselves, and to watch planets forming in situ for the nearest star-forming regions. We focus on infrared observations which are sensitive to thermal emission in the terrestrial planet formation zone and allow access to molecular tracers in warm ro-vibrational states. Successful planet formation theories will not only be able to explain the diverse features seen in disks, but will also be consistent with the rich exoplanet demographics from RV and transit surveys. While we are far from exhausting ground-based techniques, the ultimate combination of high angular resolution and high infrared sensitivity can only be achieved through mid-infrared space interferometry.
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