Over the open ocean, the aerodynamic drag coefficient is typically well predicted; however, the impact depth‐limited processes have on the drag remains underexplored. A case study is presented here where winds, waves, and currents were simultaneously observed from a mobile platform that repeatedly transected the inner shelf of Monterey Bay, CA. Eddy covariance‐derived drag coefficients were compared to several bulk parameterizations, including all of the roughness variations of COARE 3.5 and two explicitly depth‐limited models. The analysis demonstrated that the drag was underestimated by O(2–4) times and the variability with wind speed or cross‐shore distance was not well predicted. The drag based on a recent depth‐limited roughness length model performed substantially better than the rest of the bulk estimates, which were all within 15% of each other and effectively equivalent given typical operational uncertainties. The measured friction velocity was compared to a wave‐dependent parameterization and generalizing the model to arbitrary water depth significantly improved the mean observation‐model difference to within 30%. Latent variability in the observation‐model comparison was associated with stability, wind direction, and wave steepness. The wind stress angle variability was also analyzed. Stress veering was correlated with the alongshore surface current within 2 km from shore (r2= 0.7–0.95, p < 0.05); offshore of this margin, consistent wind stress veering was observed and may be attributable to a secondary, low‐frequency swell system. These results demonstrate that it remains a persistent challenge to accurately predict wind stress variability in the nearshore, especially at locations with complex wave and current fields. Plain Language Summary As the wind blows over the ocean surface, the atmosphere experiences friction, or drag, as the air and water molecules interact. Small waves increase the roughness of the surface, which augments the drag felt by the atmosphere as the air flows over the waves. This physical interaction between atmosphere and ocean facilitates the exchange of energy and material (e.g., gas) across the ocean surface, as well as drives upper ocean currents. In the presence of large waves, or swell, this interaction becomes more complicated. The impact swell has on the atmosphere changes as these large waves travel into shallow water, thereby growing taller and steeper, however our understanding of this process is limited. We present an observational study that took place within Monterey Bay and our results suggest that typical models used to predict the ocean surface drag do not perform well in the nearshore zone. In fact, applying a shallow water model did not significantly improve model‐observation comparison. We demonstrate that the mechanisms that characterize air‐sea interaction in deep water, may not apply near shore. While coastal zones are limited, compared to the global ocean, their impacts on and response to human activity are profound and should be better understood. Key Points Measured drag coefficients were 2‐4 times larger than parameterized values, when comparing several models Generalizing a wave‐dependent friction velocity model to arbitrary water depths improved model‐observation agreement to within 30% Consistent wind stress veering off the wind direction was observed and, within 2 km of shore, was associated with surface current variance