The growing demand increases the maximum utilization of transmission and distribution lines which causes overloading, high losses, instability, contingency, and congestion. To enhance the performance of AC transmission and distribution systems FACTS devices are used. These devices assist in solving different issues of transmission lines such as instability, congestion, power flow, and power losses. Advancement in developed technology leads to the development of special application-based FACTS controllers. The main issues are concerned while placing the FACTS controller in the transmission and distribution lines to maximize the flow of power. Various methods like analytic method, arithmetic programming approaches, meta-heuristic optimization approaches, and hybrid approaches are being employed for the optimal location of FACTS controllers. This paper presents a review of various types of FACTS controllers available with both analytical and meta-heuristic optimization methods for the optimal placement of FACTS controllers. This paper also presents a review of various applications of FACTS devices such as stability improvement, power quality, and congestion management which are the main issues in smart power systems. Today’s smart power systems comprise the smart grids with smart meters and ensure continuous high quality of power to the consumers.