In recent years, significant advancements in the field of advanced materials and hydrogel engineering have enabled the design and fabrication of smart hydrogels and nanogels that exhibit sensitivity to specific signals or pathological conditions, leading to a wide range of applications in drug delivery and disease treatment. This comprehensive review aims to provide an in-depth analysis of the stimuli-responsive principles exhibited by smart hydrogels in response to various triggers, such as pH levels, temperature fluctuations, light exposure, redox conditions, or the presence of specific biomolecules. The functionality and performance characteristics of these hydrogels are highly influenced by both their constituent components and fabrication processes. Key design principles, their applications in disease treatments, challenges, and future prospects were also discussed. Overall, this review aims to contribute to the current understanding of gel-based drug delivery systems and stimulate further research in this rapidly evolving field.