<p>Carbon dots (CDs) have emerged as a promising class of nanomaterials known for their exceptional fluorescence, low toxicity, biocompatibility, and environmentally friendly nature. This review focuses on their sustainable synthesis using biomass waste, transforming discarded materials into powerful tools for environmental and medical applications. Various synthesis methods of CDs and how these methods affect their properties are discussed. Their classification and other low-dimensional structures are explained with insights into their tunable properties. In environmental applications, CDs shine as sensitive fluorescent probes for detecting heavy metals, pesticides, and antibiotic pollutants. In the biomedical domain, CDs function as bioimaging agents, antibacterial materials, and emerging anticancer therapeutics. Functionalization techniques offer their targeting ability toward cancer cells and multidrug-resistant bacteria. Although CDs are generally considered low-toxic, the review addresses potential risks and the need for deeper biosafety evaluations. In light of their versatility and multifunctionality across a range of platforms, CDs are showing great promise in wearable technology, smart textiles, and theragnostic applications. Despite broad potential, challenges remain in large-scale production and the absence of standardized regulatory guidelines. In order to create more dependable and sustainable innovations, future research is focusing on designing excitation-independent CDs, reusable sensing platforms, and greener synthesis techniques. CDs have the potential to influence the next generation of biomedical and material solutions because of their unique position at the intersection of sustainability, technological advancement, and practical impact.</p> Graphical Abstract <p></p>