Understanding how the environment impacts development is of central interest in developmental and evolutionary biology. On the one hand, we would like to understand how the environment induces phenotypic changes (the study of phenotypic plasticity). On the other hand, we may ask how a development system maintains a stable and precise phenotypic output despite the presence of environmental variation. We study such developmental robustness to environmental variation using vulval cell fate patterning in the nematode Caenorhabditis elegans as a study system. Here we review both mechanistic and evolutionary aspects of these studies, focusing on recently obtained experimental results. First, we present evidence indicating that vulval formation is under stabilizing selection. Second, we discuss quantitative data on the precision and variability in the output of the vulval developmental system in different environments and different genetic backgrounds. Third, we illustrate how environmental and genetic variation modulate the cellular and molecular processes underlying the formation of the vulva. Fourth, we discuss the evolutionary significance of environmental sensitivity of this developmental system.