Chitosan, a bio-derived polymer obtained from chitin, has emerged as one of the most versatile materials for water treatment, yet its transition from laboratory innovation to scalable technology remains constrained by persistent challenges. Despite its natural abundance, biodegradability, and high affinity toward diverse pollutants, the design of robust, high-performance chitosan-based systems continues to demand innovative solutions. This review critically examines signature contributions and developments from the past five years in unmodified, crosslinked, composite, membrane, and bead forms of chitosan, highlighting not only their promise in adsorption, separation, and catalytic processes but also the fundamental gaps in understanding structure-function relationships. Particular attention is devoted to mechanistic insights into contaminant interactions, the roles of physicochemical parameters, and their consequences for performance stability under realistic conditions. Importantly, this review underscores the pressing limitations often overlooked in the literature, including poor mechanical strength, limited chemical durability, regeneration inefficiencies, and the economic and environmental barriers to scale-up. Looking forward, progress will depend on deeper mechanistic mapping, integration of multifunctionality, and adoption of green synthesis and crosslinking strategies that reconcile performance with sustainability. By situating chitosan within the broader context of emerging complementary treatment technologies, this review positions chitosan not as a mature solution but as a critical and evolving platform, one whose future hinges on addressing the complex balance between efficiency, resilience, and real-world applicability.