The classical model of cytosine DNA methylation (the presence of 5-methylcytosine, 5mC) regulation depicts this covalent modification as a stable repressive regulator of promoter activity. However, whole-genome analysis of 5mC reveals widespread tissue- and cell type–specific patterns and pervasive dynamics during mammalian development. Here we review recent findings that delineate 5mC functions in developmental stages and diverse genomic compartments as well as discuss the molecular mechanisms that connect transcriptional regulation and 5mC. Beyond the newly appreciated dynamics, regulatory roles for 5mC have been suggested in new biological contexts, such as learning and memory or aging. The use of new single-cell measurement techniques and precise editing tools will enable functional analyses of 5mC in gene expression, clarifying its role in various biological processes.