Ferrofluids (FFs) or magnetic nanofluids are incredible smart materials consisting of ultrafine magnetic nanoparticles suspended in a liquid carrier medium, which exhibit both fluidity and magnetic controllability. Studies involving the dynamics and physicochemical properties of these magnetic nanofluids are an interdisciplinary area of research attracting researchers from different fields of science and technology. Herein, a comprehensive Review on the different aspects of FF research is presented. First, the synthesis and stabilization of various types of FFs are discussed followed by their physicochemical features such as polydispersity, magnetic behavior, dipolar interactions, formation of chainlike aggregates, and long-range ordering. The Review also details the rheological and thermal properties, dynamic instabilities, phase behavior, and particle assemblies in FFs to form complex multipolar geometries, photonic nanostructures, labyrinth structures, thin films, and droplets. Many important characterization techniques for probing FF properties are also briefly discussed, and the numerous innovative applications and future prospects of FFs are outlined.