This study explores the performance and multifunctionality of Sludge Treatment Reed Bed (STRB) systems as a nature-based solution for sewage sludge management. STRBs were evaluated at six locations in Denmark and Poland, varying in operational age, design, and sludge feeding frequency. The analysis focused on sludge quality parameters, including dry matter (DM), organic matter (OM), total Kjeldahl nitrogen (TKN), total phosphorus (TP), and selected heavy metals (Cd, Pb, Ni, Cr, Cu, Zn). This article aims to critically evaluate the potential of Sludge Treatment Reed Bed (STRB) systems in the context of an evolving regulatory framework, emphasizing their role in delivering ecosystem services and advancing the circular economy. Particular attention is given to the influence of operational parameters on the quality and valorization potential of the treated sludge. Results revealed a strong influence of operational factors, particularly resting periods and system age, on sludge stabilization and nutrient recovery. For example, dry matter content ranged from 9.3% in recently loaded beds to 53.1% in long-rested systems, while organic matter decreased to as low as 28.6% in aged, inactive beds. Most sludge samples met EU thresholds for nitrogen (0.5–3.0%) and phosphorus (0.5–3.5%) in organic fertilizers, with phosphorus concentrations reaching up to 4.7%. Heavy metal levels remained below legal limits across all sites. STRBs were also assessed for their contribution to ecosystem services using the Common International Classification of Ecosystem Services framework. Findings confirm that STRBs offer provisioning, regulating, and cultural services, while simultaneously aligning with circular economy principles through nutrient cycling, low energy use, and decentralized infrastructure.