<p>Digital fashion is increasingly promoted as a sustainability breakthrough for its potential to dematerialise production, reduce sampling waste, and lower environmental impacts. This review argues that such claims, while containing elements of truth, are conceptually incomplete. Shifting from physical to virtual systems does not eliminate waste but redistributes it into digital forms embedded in data centres, cloud computing, hardware ecosystems, and platform infrastructures. Drawing on interdisciplinary literature from fashion studies, ICT sustainability, and circular economy research, this paper conceptualises digital waste as the environmental burden generated by the production, circulation, storage, and obsolescence of digital fashion assets and infrastructures. It identifies five key categories of digital waste, energy waste, data waste, infrastructural waste, platform obsolescence, and digital overproduction, and demonstrates how these remain largely unaccounted for within material-centric circular economy frameworks. The review advances the concept of digital circularity as a necessary evolution and outlines pathways toward asset reuse, slow digital fashion, open design infrastructures, and energy-efficient platforms. It further identifies critical policy and governance gaps and proposes extensions to existing instruments, including Extended Producer Responsibility (EPR), the EU Digital Product Passport (DPP), and a fashion-adapted digital Life Cycle Assessment (LCA) framework. By integrating digital systems into sustainability assessment, disclosure, and regulation, digital fashion can move beyond the illusion of zero waste and genuinely support a circular fashion economy.</p>