The process of tissue regeneration in response to severe injury involves a complex mechanism known as wound healing. Diabetic and non-healing wounds pose a significant challenge in clinical practice. Presently, various treatment approaches are employed to address acute and chronic wounds, including tissue transplantation, cell therapy, wound dressings, and the use of medical devices. Extensive research has been conducted on this subject; however, finding the most effective clinical treatment remains a daunting task. Wound dressing entails the utilization of scaffolds, typically made of biomaterials, for the delivery of medication, autologous stem cells (SCs), or growth factors derived from blood. Antibacterial and anti-inflammatory drugs are also utilized to combat infection and expedite wound healing. Given the rising elderly population and the subsequent increase in diabetes and associated skin wounds, there is an urgent need to enhance current treatment strategies. This study critically evaluates the advancements in therapeutic and clinical approaches for wound healing and tissue regeneration. Recent clinical trials have shown that modern dressings and skin substitutes offer the easiest, most accessible, and cost-effective means of treating chronic wounds. Advances in materials science, such as the use of graphene as a 3D scaffold and biomolecules, hold great promise in this field. The annual market value for successful wound treatment exceeds $50 billion US dollars, which serves as a driving force for both industries and academia to explore the application of emerging smart materials in modern dressings and skin substitutes for wound therapy.