This review emphasizes the recent ongoing shift in the wood coating industry towards bio-based resources and circular economy principles, promoting eco-friendly alternatives. In addressing wood’s vulnerabilities, this study investigates the use of natural compounds and biopolymers to enhance wood coatings. These materials contribute to protective matrices that safeguard wood surfaces against diverse challenges. Essential oils, vegetable oils, and bio-based polymers are explored for their potential in crafting eco-friendly and durable coating matrices. Furthermore, this review covers efforts to counter weathering and biological decay through the application of various natural compounds and extracts. It evaluates the effectiveness of different bio-based alternatives to traditional chemical preservatives and highlights promising candidates. This review also delves into the incorporation of sustainable pigments and dyes into wood coatings to enhance both protective and aesthetic qualities. Innovative pigments are able to provide visually appealing solutions in line with sustainability principles. As the wood coating industry embraces bio-based resources and the circular economy, researchers are actively developing protective solutions that encompass the coating matrix, preservatives, bio-based fillers, and natural-pigment dyes. This review showcases the continuous efforts of academia and industry to enhance wood coatings’ effectiveness, durability, and sustainability, while maintaining their aesthetic appeal.