Compared to the bulk piezoelectric materials counterpart, piezoelectric thin films (PTFs) possess advantages of smaller size, lower power consumption, better sensitivity, and have broad application in advanced micro-electro-mechanical system (MEMS) devices. However, the performance of MEMS transducers and actuators are largely limited by PTFs piezoelectric properties. In this review, we focus on understanding structure-property relationship of vapor deposited PTFs, with emphasis on the effect of strain energy and electrostatic energy in thin films, especially, energy relaxation induced misfit dislocation and ferroelectric (FS) and ferroelastic (FC) domain formation mechanisms. We then discuss the microstructure of these domains and their influential mechanisms on piezoelectric properties, as well as the domain engineering strategies (i.e., internal and external stimuli). This review will motivate further experimental, theoretical, and simulation studies on FS and FC domain engineering in PTFs.