Lakes, as critical carriers of global freshwater resources and key functional units of ecosystems, play a vital role in maintaining biodiversity, supporting sustainable water use, and ensuring the stable provision of multiple ecosystem services. Based on a theoretical framework for characterizing lake ecosystem status, this study systematically reviews the conceptual connotations, indicator construction logic, and applications in ecological health assessment of diversity, integrity, stability, and sustainability (hereafter referred to as the “four dimensions”). In general, diversity and integrity primarily describe community composition and structural characteristics, whereas stability and sustainability emphasize functional processes and the long-term maintenance capacity of ecosystems. Together, these four dimensions constitute an integrated structural–functional framework for assessing lake ecosystem health. At present, the “four-dimension” indicator system has been widely applied in lake ecological health assessment, restoration evaluation, and management decision support. However, several key challenges remain: high sensitivity of indicators to spatial and temporal scales, leading to limited cross-scale comparability; insufficient incorporation of ecological mechanisms in indicator selection; limited representation of functional processes such as energy flow and material cycling; and a lack of long-term continuous observations, which constrains the detection of system trajectories and lagged responses. Further analysis reveals that the four dimensions are not independent but are interconnected through structure–function coupling and feedback mechanisms. Under natural conditions, increased diversity, improved structural integrity, and enhanced ecosystem functioning can jointly promote stability and sustainability via positive feedbacks. However, under conditions of species dominance or environmental homogenization, ecosystems may shift into a “superficially stable” simplified state, characterized by reduced community variability but diminished functional redundancy and response diversity, resulting in short-term stability but long-term vulnerability. Based on these insights, this study highlights the need to develop integrated indicator systems that incorporate multi-scale and multi-taxa information, while simultaneously linking structural attributes with functional processes in both static and dynamic dimensions. Such advancements will improve the characterization of lake ecosystem health and its temporal dynamics, providing a more mechanistic foundation for ecological risk identification, management optimization, and the long-term sustainable development of lake ecosystems.