Carbon dots are one of the emerging nanomaterials within the family of carbon-based nanostructures. The spherical structure and fascinating properties of carbon dots have been recognized for their potential applications in various research fields, such as food packaging, biological sensing, optical technology, drug delivery, photodynamic therapy, photocatalysis, and solar cells. Especially, carbon dots have been captivated as potential candidates for food packaging applications due to their antibacterial, biocompatibility, and antioxidant properties as well as their nontoxic nature and low processing cost. Traditionally, two technical routes have been employed for the preparation of carbon dots: the bottom-up method and the top-down method. Each method has its own advantages over other methods, and these methods exhibit a unique characteristic property for its applications. This review provides clear and in-depth insights into the various preparation methods and their influence on the physical properties and characteristics of carbon dots. The preparation methods for carbon dot such as bottom-up and top-down approaches were also summarized in detail, and the effects of preparation methods of both approaches and their influence on the physical, chemical, and morphological property of carbon dots are discussed comprehensively. In addition, comprehensive information is provided about the various synthesis parameters and precursors used in the preparation plans of carbon dots and characterization influenced by methods that could be helpful to the researcher in choosing the carbon dot methodology for food packaging application.