The line-driven instability of hot-star winds is known to lead to extensive clumped structure in the near-star acceleration portion of the wind. In this paper, we summarize our recent efforts to simulate the distant evolution of this structure far from the stellar surface. We emphasize in particular the key role of the flow energy balance, which through its influence on the temperature and thus the pressure of the clumped vs. intraclumped flow, controls the dissipation of clumps through pressure expansion. We discuss the general implications for interpreting observational diagnostics in the X-ray, infrared, and radio regimes.