Grasslands cover between 30 and 40% of the world’s land surface and, despite providing numerous ecosystem services and being rich in biodiversity, are increasingly under threat and shrinking in coverage. As such, the development and application of monitoring techniques are of vital importance. The use of remotely sensed imagery for the monitoring of both biodiversity and functional traits in grassland ecosystems has increased substantially in the last few decades. More recently, uncrewed aerial vehicles (UAVs) have begun to play an increasingly important role, acting as a bridge between the decameter satellite imagery and the point scale data collected on the ground. The use of UAV-mounted hyperspectral sensors, covering up to hundreds of spectral bands, has become particularly popular as the senor sizes have reduced, and UAV technology has improved. Here, we provide a review of the latest remotely sensed monitoring methods for both biodiversity and functional traits using multispectral and hyperspectral sensors. We highlight the key innovations that have occurred (e.g., use of point cloud data, identification of error sources), the bottlenecks to and opportunities for further development. UAV surveys show particular promise for monitoring functional traits. We conclude that UAV methods offer the opportunity to scale surveys from individual sites to regional areas, and can aid in refining satellite-based observations to improve the monitoring of grassland ecosystems at national and global scales.