Recently, the Modular Multilevel Converter (MMC) has drawn significant attention due to its diverse merits and its applicability to a wide range of medium to high-power applications. The growing interest in the MMC can be attributed to its attractive features such as modularity, reliability, and high voltage capability. Significant research has been conducted on the MMC over the last few years to develop its operation and control in various applications. However, the application of MMCs in microgrids remains a largely unexplored topic. Therefore, this paper aims to address this research gap by offering an in-depth review of the latest developments concerning circuit topologies, control schemes, and fault-tolerance strategies of MMC within microgrid applications. This comprehensive review not only provides a synthesized overview of the current state of the art but also paves the way for future investigations in this promising field. The outcomes from this study are expected to stimulate further advancements in MMC applications in microgrid systems, thus contributing to the continuous improvement and evolution of microgrids.