DNA methylation is a highly conserved epigenetic modification that plays essential roles in mammalian gene regulation, genome stability and development. Despite being primarily considered a stable and heritable epigenetic silencing mechanism at heterochromatic and repetitive regions, whole genome methylome analysis reveals that DNA methylation can be highly cell-type specific and dynamic within proximal and distal gene regulatory elements during early embryonic development, stem cell differentiation and reprogramming, and tissue maturation. In this Review, we focus on the mechanisms and functions of regulated DNA methylation and demethylation, highlighting how these dynamics, together with crosstalk between DNA methylation and histone modifications at distinct regulatory regions, contribute to mammalian development and tissue maturation. We also discuss how recent technological advances in single-cell and long-read methylome sequencing, along with targeted epigenome-editing, are enabling unprecedented high-resolution and mechanistic dissection of DNA methylome dynamics.