Drought stress can trigger tree mortality but the impact depends on stress intensity (water demand and availability) and on the vulnerability of the individual. Therefore, most research focusses on the species-specific properties such as water use efficiency or hydraulic conductivity that determine vulnerability. At the ecosystem scale, however, tree properties that have been found important for drought sensitivity or resistance vary with individual size and resource availability within a forest—also within the same species. This is caused by different environmental conditions for each tree and hence different growth histories of individuals generating specific anatomical and physiological features. Individual drought stress sensitivity might thus be considerably different from stand scale sensitivity. Indeed, empirical evidence shows that drought stress impact depends on tree social position which can be defined in degrees of suppression but correlated to resource availability, stress sensitivity and stress exposure. In this review, we collect such evidence and discuss the role of microclimate and soil water distribution as well as anatomical and physiological adjustments, which might serve as foundation for better-adapted management strategies to mitigate drought stress impacts. Finally, we define model requirements aiming to capture stand-scale drought responses or management impacts related to drought stress mitigation.