Hydrothermal carbonization is a process that can efficiently convert biomass with high water content into hydrochar, allowing for the high-value utilization of the biomass. This paper provides an introduction to the principles, characteristics, and advantages of the hydrothermal method in the production of hydrochar. Typically, hydrochar exhibits a yield ranging from 25% to 52% and carbon contents between 51% and 77%. The study also examines the impact of biomass feedstock, temperature, and reaction time on the yield and quality of hydrochar. Furthermore, the paper delves into diverse applications of hydrochar, encompassing its utilization as a fuel and electrode material, as well as its efficacy in wastewater treatment, soil amelioration, and the enhancement of anaerobic fermentation for biogas production. For instance, hard carbon derived from driftwood hydrochar demonstrated a high coulombic efficiency of 77–83%. Additionally, the COD removal rate of domestic wastewater improved to over 76% after treatment with municipal sludge-modified hydrochar. Moreover, straw hydrochar was found to enhance cumulative methane production by approximately 14% during the anaerobic fermentation of straw. The paper concludes by discussing the prospects of hydrochar preparation and utilization.