This paper provides a comprehensive analysis of recent advancements in additive manufacturing, a transformative approach to industrial production that allows for the layer-by-layer construction of complex parts directly from digital models. Focusing specifically on Directed Energy Deposition, it begins by clarifying the fundamental principles of metal additive manufacturing as defined by International Organization of Standardization and American Society for Testing and Materials standards, with an emphasis on laser- and powder-based methods that are pivotal to Directed Energy Deposition. It explores the critical process mechanisms that can lead to defect formation in the manufactured parts, offering in-depth insights into the factors that influence these outcomes. Additionally, the unique mechanisms of defect formation inherent to Directed Energy Deposition are examined in detail. The review also covers the current landscape of process evaluation and non-destructive testing methods essential for quality assurance, including both traditional and contemporary in situ monitoring techniques, with a particular focus given to advanced machine-vision-based methods for geometric analysis. Furthermore, the integration of process monitoring, multiphysics simulation models, and data analytics is discussed, charting a forward-looking roadmap for the development of Digital Twins in Laser–Powder-based Directed Energy Deposition. Finally, this review highlights critical research gaps and proposes directions for future research to enhance the accuracy and efficiency of Directed Energy Deposition systems.