Myeloid cells, comprised of macrophages, dendritic cells, monocytes, and granulocytes, represent a major component of the tumor microenvironment (TME) and are critically involved in regulation of tumor progression and metastasis. In recent years, single-cell omics technologies have identified multiple phenotypically distinct subpopulations. In this review, we discuss recent data and concepts suggesting that the biology of myeloid cells is largely defined by a very limited number of functional states that transcend the narrowly defined cell populations. These functional states are primarily centered around classical and pathological states of activation, with the latter state commonly defined as myeloid-derived suppressor cells. We discuss the concept that lipid peroxidation of myeloid cells represents a major mechanism that governs their pathological state of activation in the TME. Lipid peroxidation is associated with ferroptosis mediating suppressive activity of these cells and thus could be considered an attractive target for therapeutic intervention.