<p>The need for high-quality electricity has increased because of the increased number of loads, rising energy consumption, and the growth of population, which has necessitated the transition from traditional power grids to renewable-based microgrids (MGs). MGs integrate renewable energy sources (RES), such as solar and wind power, which offer several advantages, including improved reliability, cost-effectiveness, and sustainability. However, their widespread adoption is challenged by issues related to economic feasibility, energy management, and system stability. This review provides a comprehensive analysis of MG configurations, control strategies, and optimization techniques to address these challenges. The key contributions of this study include (i) an in-depth evaluation of MG features, functionalities, and technologies to highlight their benefits over conventional power systems; (ii) a review of advanced optimization methods for hybrid RES-based MGs to enhance energy reliability and cost-effectiveness; (iii) the introduction of intelligent energy management frameworks using artificial intelligent (AI)-based predictive algorithms for real-time load balancing and power distribution; and (iv) a detailed assessment of MG deployment policies and their role in modernizing distribution systems. The findings of this study have significant implications for decision-makers, grid operators, and researchers, offering a strategic framework for integrating MGs into the grid, addressing power quality issues, reducing operational costs, and ensuring the smooth adoption of renewable energy. This review connects theoretical advancements with real-world applications, which help to build strong, efficient, and sustainable energy networks.</p> Graphical abstract <p></p>