Monolayer transition-metal dichalcogenides (ML-TMDs) offer exciting opportunities to test the manifestations of many-body interactions through changes in the charge density. The two-dimensional character and reduced screening in ML-TMDs lead to the formation of neutral and charged excitons with binding energies orders of magnitude larger than those in conventional bulk semiconductors. Tuning the charge density by a gate voltage leads to profound changes in the optical spectra of excitons in ML-TMDs. On the one hand, the increased screening at large charge densities should result in a blueshift of the exciton spectral lines due to reduction in the binding energy. On the other hand, exchange and correlation effects that shrink the band-gap energy at elevated charge densities (band-gap renormalization) should result in a redshift of the exciton spectral lines. While these competing effects can be captured through various approximations that model long-wavelength charge excitations in the Bethe-Salpeter equation, we show that a novel coupling between excitons and shortwave charge excitations is essential to resolve several experimental puzzles. Unlike ubiquitous and well-studied plasmons, driven by collective oscillations of the background charge density in the long-wavelength limit, we discuss the emergence of shortwave plasmons that originate from the short-range Coulomb interaction through which electrons transition between the [Formula: see text] and [Formula: see text] valleys. The shortwave plasmons have a finite energy-gap because of the removal of spin-degeneracy in both the valence- and conduction-band valleys (a consequence of breaking of inversion symmetry in combination with strong spin-orbit coupling in ML-TMDs). We study the coupling between the shortwave plasmons and the neutral exciton through the self-energy of the latter. We then elucidate how this coupling as well as the spin ordering in the conduction band give rise to an experimentally observed optical sideband in electron-doped W-based MLs, conspicuously absent in electron-doped Mo-based MLs or any hole-doped ML-TMDs. While the focus of this review is on the optical manifestations of many-body effects in ML-TMDs, a systematic description of the dynamical screening and its various approximations allow one to revisit other phenomena, such as nonequilibrium transport or superconducting pairing, where the use of the Bethe-Salpeter equation or the emergence of shortwave plasmons can play an important role.