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The paper re-examines the twin concepts of knowledge “tacitness” and “codification”, which both the literature on (broadly defined) industrial districts, and some recent econometric literature on “localized knowledge spillovers” have possibly mis-handled. Even within specialized local small and medium enterprises (SMEs) clusters, knowledge may be highly codified and firm-specific. The case study on Brescia mechanical firms shows that knowledge, rather than flowing freely within the cluster boundaries, circulates within a few smaller “epistemic communities”, each centered around the mechanical engineers of individual machine producers, and spanning to a selected number of suppliers’ and customers’ technicians. Physical distance among members of each community vary a lot, but even local messages may be highly codified.