Promoting rural economic revitalization through industrial development is the primary path towards rural revitalization amid global rural decline. We portrayed the spatiotemporal evolution of “One Village, One Product” demonstration villages and towns (DVTs) in China from 2011 to 2021, explored their spatial clustering characteristics using hotspot analysis, investigated spatial differences using Dagum Gini Coefficient, identified influencing factors using geo-detector, and analyzed their influencing mechanisms to reveal the hidden issues. Results indicated that the number of DVTs increased, but the dominant industry categories differed significantly, with agricultural DVTs dominating. Fruit cultivation, vegetables, edible fungi and horticulture, and crop cultivation dominated industrial subcategories. DVTs presented a spatial pattern of dense east and sparse west, dense north and sparse south, with a balanced development trend. Spatial aggregation of DVTs was weakened but locally enhanced, mainly in sub-cold and cold spot areas. DVTs were characterized by spatial non-equilibrium, which gradually increased, and the primary sources of spatial variation were cross-influences between different regions. The spatial pattern evolution of DVTs results from the market demand orientation and policy guidance, supported by traffic level and economic foundation, on top of the basic conditions of DVTs such as geographical conditions and resources. Issues like regional imbalance, industrial homogenization risk, and traditional agricultural limitations are evident behind the spatial pattern of DVTs, which urgently need to be addressed. The essence of the DVTs is to support the development of economic growth cores within them, form specialized production clusters, realize industrial linkages between counties, towns and villages, and build integrated urban-rural industrial systems. The composite top-down and bottom-up development model of China's DVTs is transferable to other developing countries. We proposed measures to foster DVTs based on specific results and the potential problems revealed, offering insights for global rural economic growth.