Bone morphogenetic proteins (BMPs) perform a variety of functions during development. Considering a single BMP, what enables its multiple roles in tissues of varied sizes and shapes? What regulates the spatial distribution and activity patterns of the BMP in these different developmental contexts? Some BMP functions require controlling spread of the BMP morphogen, while others require formation of localized, high concentration peaks of BMP activity. Here we review work in Drosophila that describes spatial regulation of the BMP encoded by decapentaplegic (dpp) in different developmental contexts. We concentrate on extracellular modulation of BMP function and discuss the mechanisms that generate concentrated peaks of Dpp activity, subdivide territories of different activity levels or regulate spread of the Dpp morphogen from a point source. We compare these findings with data from vertebrates and non-model organisms to discuss how changes in the regulation of Dpp distribution by extracellular modulators may lead to variability in dpp function in different species.