In recent years, carbon dots (CDs), including carbon nanodots, carbonized polymer dots, carbon quantum dots, and graphene quantum dots have attracted a mounting interest as readily accessible, nontoxic, and relatively inexpensive carbon-based nanomaterials. Yet, despite intense research for a number of years, a unifying picture is still lacking to clarify the exact definition, clear chemical structure, and unique optical properties of this family of nanomaterials. In this review, we systematically summarize the recent development of CDs from molecular design to related properties of excited states as well as their applications in optoelectronic devices and biology. We point out the current challenges, including exploring precise synthesis, clarifying the structure-property relationship, and regulating singlet and triplet states of fluorescence, phosphorescence, and delayed fluorescence. Moreover, the structural optimization of optoelectronic devices, tumor targeting mechanism, selective imaging, and drug delivery of CDs are also highlighted. We hope that the information provided in this review will inspire more exciting research on CDs from a brand-new perspective and promote practical application of CDs in multiple directions of current and future research.