Novel plasma-based technologies that offer maximum efficiency at minimal environmental costs are expected to further promote the sustainable societal and economic development. Unique transfer of chemical reactivity and energy from gaseous plasmas to water takes place in the absence of any other chemicals, but results in a product with a notable transient broad-spectrum biological activity, referred to as plasma-activated water (PAW). These features make PAW a green prospective solution for a wide range of biotechnology applications, from water purification to biomedicine. Here, we present a succinct review of how novel, efficient methods based on non-equilibrium reactive plasma chemistries can be applied to low-cost natural water sources to produce a prospective product with a wide range of applications while at the same time minimising the process steps and dramatically reducing the use of expensive and/or hazardous reagents. Despite the recent exciting developments in this field, there presently is no topical review which specifically focuses on the underlying physics and chemistry related to plasma-activated water. We focus specifically on the PAW generation, origin of reactive species present in PAW, its related analytical chemistry and potentially different mechanisms that regulate the bio-activities of PAW in different biotech-applications and their roles in determining PAW efficacy and selectivity. We then review recent advances in our understanding of plasma-water interactions, briefly outlining current and proposed applications of PAW in agriculture, food and biomedicine. Finally, we outline future research directions and challenges that may hinder translation of these technologies into real-life applications. Overall, this review will provide much needed insights into the fundamental aspects of PAW chemistry required for optimization of the biochemical activity of PAW and translation of this environment- and human-health-friendly, and energy-efficient strategy into real life applications.