With the intensification of the global energy crisis, green, low-carbon, and environmentally friendly biomass materials have become the focus of research. Among them, biomass-derived carbon dots (B-CDs), a novel class of sustainable zero-dimensional carbon nanomaterials, attract significant interest due to their environmental friendliness, low toxicity, and unique optical properties. Research findings indicate that B-CDs, utilizing biomass materials as carbon sources, demonstrate significant potential in numerous application fields through structural design and photo-functionalization. However, the underlying mechanisms and formation processes of B-CDs remain inadequately elucidated, and systematic summarization still requires further refinement. Therefore, this review systematically summarizes the synthesis methods, precursor structures, formation mechanisms, luminescent properties, and prevailing applications of B-CDs, with a particular emphasis on recent advances in their use for sensing, anti-counterfeiting, bioimaging, and optronics. In addition, the challenges encountered in performance-oriented controllable preparation and large-scale production were also clarified. This comprehensive review provides a theoretical foundation for further research and multidisciplinary applications of B-CDs, thereby contributing to promoting large-scale commercialization and industrial implementation.