In all-optical WDM networks, feasibility of a lightpath are determined by physical layer impairment accumulation. Physical layer impairment-aware routing and wavelength assignment (PLIA-RWA) algorithms select a feasible route keeping signal to noise ratio value at the receiver above the threshold limit. This paper reviews the impairments present in optical fiber emphasizing those that result in performance degradation of WDM system. Different types of channel allocation schemes to reduce the number of four wave mixing components generated and performance of the WDM optical network under these channel allocation schemes have also been reviewed. The performance of WDM network due to collective effect of FWM-SRS and FWM-XPM has been discussed. Limitations of amplifier and its optimal location have also been discussed. The article further examines and surveys the role of wavelength converters/regenerators in regard to efficient network design. The paper also presents a survey of different PLIA-RWA algorithms and identifies several open problems for future research.