Cold atmospheric plasma (CAP) has emerged as a versatile platform at the intersection of plasma physics, materials engineering, and biomedicine, enabling both therapeutic and surface modification applications. Operating at near-room temperature and atmospheric pressure, CAP generates reactive oxygen and nitrogen species (RONS), charged particles, ultraviolet radiation, and electric fields that collectively induce complex physicochemical interactions with biological systems and material surfaces. This review presents an integrated framework linking plasma operating parameters, reactive species generation, surface physicochemical modification, and biological responses, highlighting CAP as a multifunctional physicochemical system. Recent advances in CAP applications are discussed in sterilization and disinfection, oncology, wound healing, dentistry, and biomaterials engineering, with emphasis on mechanisms such as surface activation, wettability enhancement, biofunctionalization, and selective cytotoxicity toward cancer cells. Emerging plasma-activated materials, including hydrogels, nanocomposites, and polymeric coatings, are also reviewed as promising therapeutic and biomedical platforms. Compared with conventional technologies, CAP offers advantages such as non-thermal operation, tunability, multi-modal action, and potential selective biological targeting. However, challenges remain in standardizing plasma parameters, improving reproducibility, and understanding long-term biological and material responses. This review provides a structured perspective for advancing CAP toward clinically and technologically relevant applications.