Topical and transdermal drug delivery faces continuous challenges, primarily due to the formidable barrier function of the stratum corneum (SC), which limits the bioavailability of therapeutics. Nanotechnology-based drug delivery systems (NDDS) have emerged as powerful strategies to overcome these limitations, offering improved drug permeation, sustained release, and enhanced solubility for hydrophobic compounds. This review provides a critical and concise analysis of the latest advancements in NDDS, specifically those employed for both dermal (localized) and transdermal (systemic) delivery. Key nanosystems, including lipid-based, polymeric nanoparticles, vesicular structures, nanoemulsions, nanofibers, dendrimers and micelles are explored, highlighting how their unique physicochemical properties facilitate optimized drug performance. Crucially, the design strategies that selectively target the dermis versus those engineered for transdermal penetration are compared and contrasted. Furthermore, the often-overlooked clinical aspects, including the current understanding of the in vivo fate, biocompatibility, and safety profile of these nanocarriers within the skin layers, are addressed. This comprehensive evaluation provides a foundation for future development of safer and more effective nanomedicines for cutaneous applications.