Ptdns(4,5)P₂ is a minor structural lipid of the plasma membrane (PM), but a master regulator of PM function. Serving either as a substrate for the generation of second messengers, or more commonly as a ligand triggering protein recruitment or activation, it regulates most aspects of PM function. Understanding how this relatively simple biological macromolecule can regulate such a vast array of different functions in parallel, is the key to understanding the biology of the PM as a whole, in both health and disease. In this review, potential mechanisms are discussed that might explain how a lipid can separately regulate so many protein complexes. The focus is on the spatial distribution of the lipid molecules, their metabolism and their interactions. Open questions that still need to be resolved are highlighted, as are potential experimental approaches that might shed light on the mechanisms at play. Moreover, the broader question is raised as to whether PtdIns(4,5)P₂ should be thought of as a bona fide signalling molecule or more of a simple lipid cofactor or perhaps both, depending on the context of the particular function in question.