With the rapid development of electrical power systems in recent years, microgrids (MGs) have become increasingly prevalent. MGs improve network efficiency and reduce operating costs and emissions because of the integration of distributed renewable energy sources (RESs), energy storage, and source-load management systems. Despite these advances, the decentralized architecture of MGs impacts the functioning patterns of the entire system, including control strategy, energy management philosophy, and protection scheme. In this context, developing a convenient protection strategy for MGs is challenging because of various obstacles, such as the significant variance in short-circuit values under different operating modes, two-way power flow, asynchronous reclosing, protection blinding, sympathetic tripping, and loss of coordination. In light of these challenges, this paper reviews prior research on proposed protection schemes for AC-MGs to thoroughly evaluate network protection's potential issues. The paper also provides a comprehensive overview of the MG structure and the associated protection challenges, solutions, real applications, and future trends.