<p>DNA methylation is a fundamental epigenetic modification that regulates gene expression, maintains genome stability, and supports developmental programs in plants. Rather than being static, the plant methylome is highly dynamic and continuously shaped by the opposing activities of DNA methyltransferases and DNA demethylases. Active DNA demethylation, initiated by the DEMETER/REPRESSOR OF SILENCING 1 (DME/ROS1) family of 5-methylcytosine (5mC) DNA glycosylases, is a major mechanism for removing repressive methylation marks and facilitating transcriptional plasticity. This review summarizes current knowledge of the molecular machinery and regulatory networks underlying active DNA demethylation. It highlights multi-layered regulation of demethylases activity, including chromatin-based targeting, assembly of regulatory protein complexes, and transcriptional and post-translational control. We further discuss the roles of DNA demethylation in key developmental processes, including genomic imprinting, fruit ripening, and organogenesis. A major focus is its proposed role as an integrator of environmental signals, mediating plant responses to diverse biotic and abiotic stresses such as drought, salinity, temperature extremes, and pathogen infection. This review also examines crosstalk between DNA demethylation, phytohormone signaling, and metabolic pathways, as well as its roles in stress memory, epigenetic memory, and transgenerational epigenetic inheritance. Finally, we outline key unresolved questions, particularly those related to the mechanistic basis of locus-specific targeting and the stability of stress-induced epigenetic states, including epigenetic memory and transgenerational epigenetic inheritance, and discuss how precision epigenome engineering may provide opportunities to translate these mechanistic insights into targeted regulation of developmental and stress-responsive pathways, thereby advancing crop improvement and sustainable agriculture.</p>