Seed germination is crucial for plant survival, crop stand establishment, and achieving optimal grain yield. The main objective of this review is to explore the physiological and molecular mechanisms governing rice seed germination under aerobic (water stress) and anaerobic (hypoxic) conditions in direct-seeded rice (DSR) systems. Moreover, it discusses the recent genomic advancements and innovations to improve rice seed germination. Here, we discuss how coleoptile and mesocotyl elongation plays a vital role in anaerobic germination (AG) and the function of raised antioxidants, including superoxide dismutase (SOD), peroxidase (POD), and catalase (CAT) in maintaining Reactive Oxygen Species (ROS), and malondialdehyde (MDA) homeostasis for stabilizing seed germination in water-scarce conditions. This study comprehensively highlights the functions and dynamics of phytohormones—GA (gibberellic acid) and ABA (abscisic acid)—key regulatory genes, transcription factors (TFs), key proteins, and regulatory metabolic pathways, including glycolysis, the pentose phosphate pathway (PPP), and the tricarboxylic acid cycle (TCA), in regulating seed germination under both conditions. Conventional agronomic and cultural practices, such as seed selection, seed priming, seed coating, and hardening, have proven to improve seed germination. Moreover, the utilization of molecular and novel approaches—such as clustered regularly interspaced short palindromic repeat (CRISPR-Cas9) mediated genome editing, marker-assisted selection (MAS), genome-wide associations studies (GWAS), single nucleotide polymorphisms (SNPs), multi-omics, RNA sequencing—combined with beneficial quantitative trait loci (QTLs) has expanded knowledge of crop genomics and inheritance. These advancements aid the development of specific traits for enhancing seed germination in DSR.