With the development of society and the economy, there is an increasing demand for surface treatment techniques that can efficiently utilize metal materials to obtain good performances in the fields of mechanical engineering and the aerospace industry. The laser metal deposition (LMD) technique for cladding has become a research focus in recent years because of its lower dilution rate, small heat-effect zone and good metallurgical bonding between the coating and substrate. This paper reviews the simulation technology for the melt pool’s grain growth mechanism, temperature and stress distribution that are directly related to defect formation in LMD technology. At the same time, the defect suppression method and the performance improvement method of the cladded layer in LMD technology are introduced. Finally, it is pointed out that the active selection of materials according to the required performance, combined with the controllable processing technology, to form the corresponding microstructure, and finally, to actively realize the expected function, is the future development direction of LMD technology.