In the modern scenario, optical fiber communication technology has rapidly progressed with continuous exploration of emerging technologies to support more amount of bandwidth, higher data rate and improved security along with reduction in losses and electromagnetic immunity. Optical fiber communication system has remarkably low loss and is reliably capable of meeting the demand of massively increased information traffic employing a minimum number of repeaters in its performance link. In this paper, we discuss broadly optical fiber technology theory, types, working principle with its various merits and demerits in the application scenario. Single-mode graded index fiber has been analyzed in comparison to multi-mode fibers and it has emerged as the most efficient means of broad band signal transmission offering many distinct advantages. The possible consequences of both linear and nonlinear effects of the optical fiber and other limiting factors that influence the performance of propagation characteristics have been discussed which are reasonably relevant to the emerging areas of optical engineering ,photonics and related fiber optic devices.