Genetic algorithms (GAs) are a powerful class of optimization techniques inspired by the principles of natural selection and genetics. One of the theoretical cornerstones of GAs is schema theory, which provides a framework for understanding how building blocks of solutions, known as schemas, are propagated and combined through generations. This review paper aims to provide a comprehensive theoretical analysis of schema formation in genetic algorithms. It delves into the foundational principles of schema theory, including the schema theorem and its implications for the efficiency and behavior of GAs. The paper also explores advanced topics such as schema disruption mechanisms, the impact of multimodal and epistatic fitness landscapes, and the integration of schema theory with hybrid approaches. Additionally, practical implications and real-world applications of schema theory are discussed through case studies and best practices. By elucidating the mechanisms of schema formation and their influence on genetic algorithm performance, this review seeks to offer valuable insights and directions for future research. Ultimately, this theoretical exploration aims to bridge the gap between abstract concepts and practical application, contributing to the advancement of genetic algorithms as robust optimization tools.