Diabetic wounds (DWs) are a major complication of diabetes mellitus, characterized by a complex pathophysiological microenvironment that is associated with elevated morbidity and mortality. Conventional management strategies often fail to address the multifaceted nature of these wounds effectively. Recent advancements in understanding the mechanisms of DW healing have spurred the development of a plethora of bioactive dressings designed to interact with and modulate the DW microenvironment. These innovations have culminated in the introduction of the “microenvironment-sensitive with on-demand management” paradigm aimed at delivering precision therapy responsive to dynamic changes within DW. Despite these advancements, the current literature lacks a comprehensive review that categorizes and evaluates active, passive, and on-demand approaches that address the DW microenvironment. Herein, we describe the unique pathogenic mechanisms and microenvironmental characteristics that distinguish DW from normal acute wounds. This review provides an extensive overview of contemporary active and passive management strategies incorporating on-demand management principles designed for DW microenvironments. Furthermore, it addresses the principal challenges faced in this therapeutic domain and outlines the potential innovations that can enhance the efficacy and specificity of bioactive dressings. The insights presented here aim to guide further research and development in the on-demand management of DW to improve patient outcomes by aligning personalized therapy modalities with the pathophysiological realities of DW.