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The lyotropic cholesteric liquid crystal phase developed by suspensions of cellulose nanocrystals (CNCs) has come increasingly into focus from numerous directions over the last few years. In part, this is because CNC suspensions are sustainably produced aqueous suspensions of a fully bio-derived nanomaterial with attractive properties. Equally important is the interesting and useful behavior exhibited by solid CNC films, created by drying a cholesteric-forming suspension. However, the pathway along which these films are realized, starting from a CNC suspension that may have low enough concentration to be fully isotropic, is more complex than often appreciated, leading to reproducibility problems and confusion. Addressing a broad audience of physicists, chemists, materials scientists and engineers, this Review focuses primarily on the physics and physical chemistry of CNC suspensions and the process of drying them. The ambition is to explain rather than to repeat, hence we spend more time than usual on the meanings and relevance of the key colloid and liquid crystal science concepts that must be mastered in order to understand the behavior of CNC suspensions, and we present some interesting analyses, arguments and data for the first time. We go through the development of cholesteric nuclei (tactoids) from the isotropic phase and their potential impact on the final dry films; the spontaneous CNC fractionation that takes place in the phase coexistence window; the kinetic arrest that sets in when the CNC mass fraction reaches ∼10 wt.%, preserving the cholesteric helical order until the film has dried; the ’coffee-ring effect’ active prior to kinetic arrest, often ruining the uniformity in the produced films; and the compression of the helix during the final water evaporation, giving rise to visible structural color in the films.