Micro and nano structured optical sensors have improved performance over traditional optical sensors. They provide advance optical sensing techniques and integration over photonic integrated circuits. Various optical cavity structures have been designed in the past few decades to improve sensing performance of the sensors based on the materials choice and their physical properties. Choice of materials, sensing parameters, size, loss, robustness, selectivity and sensitivity define the application of sensors in the area of healthcare diagnosis, defense, remote sensing, and industrial applications. In this chapter, development and challenges in the next generation optical sensor devices are discussed along with their applications.