Understanding the origins of cellular complexity and dynamics of gene regulatory modules is critical to gain insights into the multicellular organization in eumetazoan evolution. Positioned at the base of Eumetazoa, cnidarians such as Hydra offer crucial insights into these fundamental processes due to their unique combination of simple body plans and complex biological capabilities. Their key phylogenetic position allows researchers to trace the emergence of cell types such as neurons, gland cells, and germ cells, and also specialized cell types such as cnidocytes from common progenitor populations. Hydra has been known as a popular model system for studying its extraordinary regeneration process. This has enabled the understanding of the axis formation and cellular reprogramming, making it a valuable model for studying morphogenesis, patterning, and cellular plasticity. Moreover, Hydra exhibits conserved and dynamic epigenetic mechanisms, such as DNA methylation, histone modifications, and noncoding RNAs, which regulate gene expression across different cell types and during regeneration. Collectively, these features make Hydra an ideal system to investigate the evolution of cell types, the interplay between regeneration and developmental signaling, and the origins of epigenetic regulation in early multicellular life. Here, we synthesize existing knowledge to offer new perspectives and highlight the expanded potential of Hydra as a model system.