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A microgrid (MG) is a local entity that consists of distributed energy resources (DERs) to achieve local power reliability and sustainable energy utilization. The MG concept or renewable energy technologies integrated with energy storage systems (ESS) have gained increasing interest and popularity because it can store energy at off-peak hours and supply energy at peak hours. However, existing ESS technology faces challenges in storing energy due to various issues, such as charging/discharging, safety, reliability, size, cost, life cycle, and overall management. Thus, an advanced ESS is required with regard to capacity, protection, control interface, energy management, and characteristics to enhance the performance of ESS in MG applications. This paper comprehensively reviews the types of ESS technologies, ESS structures along with their configurations, classifications, features, energy conversion, and evaluation process. Moreover, details on the advantages and disadvantages of ESS in MG applications have been analyzed based on the process of energy formations, material selection, power transfer mechanism, capacity, efficiency, and cycle period. Existing reviews critically demonstrate the current technologies for ESS in MG applications. However, the optimum management of ESSs for efficient MG operation remains a challenge in modern power system networks. This review also highlights the key factors, issues, and challenges with possible recommendations for the further development of ESS in future MG applications. All the highlighted insights of this review significantly contribute to the increasing effort toward the development of a cost-effective and efficient ESS model with a prolonged life cycle for sustainable MG implementation.