Single-cell RNA-sequencing (scRNA-seq) technology brought about a revolutionary change in the transcriptomic world, paving the way for comprehensive analysis of cellular heterogeneity in complex biological systems. It enabled researchers to see how different cells behaved at single-cell levels, providing new insights into the process. However, despite all these advancements, scRNA-seq also experiences challenges related to the complexity of data analysis, interpretation, and multi-omics data integration. In this review, these complications were discussed in detail, directly pointing at the optimization of scRNA-seq approaches and understanding the world of single-cell and its dynamics. Different protocols and currently functional single-cell databases were also covered. This review highlights different tools for the analysis of scRNA-seq and their methodologies, emphasizing innovative techniques that enhance resolution and accuracy at a single-cell level. Various applications were explored across domains including drug discovery, tumor microenvironment (TME), biomarker discovery, and microbial profiling, and case studies were discussed to explain the importance of scRNA-seq by uncovering novel and rare cell types and their identification. This review underlines a crucial aspect of scRNA-seq in the advancement of personalized medicine and highlights its potential to understand the complexity of biological systems.