Oceanic LiDAR (hereafter referred to as O-LiDAR) is an important remote sensing device for measuring the near-coastal water depth and for studying the optical properties of water bodies. With the commercialization of LiDAR, the theoretical research on the underwater transmission characteristics of LiDAR has been intensified worldwide. Primary research interests include the simulation and modeling of LiDAR underwater echo signals and the inversion of optical parameters using LiDAR water echo signals. This article provides an overview of the principle of LiDAR echo signal formation, and comprehensively summarizes the LiDAR echo signal simulation modeling methods and the corresponding factors that affect modeling accuracy by focusing on the characteristics of different methods. We found that the current simulation methods of LiDAR underwater transmission echo signals primarily include an analytical method based on the radiation transfer equation and a statistical method based on the Monte Carlo (MC) model. The radiation transport equation needs to be appropriately simplified using the analytical method, usually using the quasi-single-small-angle approximation principle. The analytical method has high calculation efficiency but its accuracy is dependent to the quasi-single small-angle approximation. The statistical method can analyze the influence of various factors on echo signals by controlling the variables, but it has poor calculation efficiency. Finally, the semianalytical MC model was used to quantitatively analyze the three main factors (LiDAR system parameters, water body optical parameters, and environmental parameters) affecting underwater LiDAR transmission characteristics, and summarizes the mechanism and results of different factors.