Hydrothermal carbonization (HTC) has emerged as a pivotal technology in the battle against climate change and fosters circular economies. Operating within a unique reaction environment characterized by water as a solvent and moderate temperatures at self-generated pressures, HTC efficiently converts biomass residues into valuable bio-based products. Despite HTC’s potential—from the management of challenging biomass wastes to the synthesis of advanced carbons and the implementation of biorefineries—it encounters hurdles transitioning from academic exploration to industrial implementation. Gaps persist, from a general comprehension of reaction intricacies to the difficulty of large-scale integration with wastewater treatments, to the management of process water, to the absence of standardized assessment techniques for HTC products. Addressing these challenges demands collaboration to bridge the many scientific sectors touched by HTC. Thus, this article reviews the current state of some hot topics considered crucial for HTC development: It emphasizes the role of HTC as a cornerstone for waste management and biorefineries, highlighting potentialities and challenges for its development. In particular, it surveys fundamental research aspects, delving into reaction pathways, predictive models, analytical techniques, and HTC modifications while exploring HTC’s crucial technological applications and challenges, with a peculiar focus on combined HTC, wastewater integration, and plant energy efficiency.