Electrowetting display (EWD) has promising prospects in the electronic paper industry due to it having superior characteristics, such as the ability to provide a comfortable reading experience and quick response. However, in real applications, there are also problems related to dielectric deterioration, excess power consumption, optical instability and narrow color gamut etc. This paper reviewed the existing challenges and recent progress made in terms of improving the optical performance and reliability of EWD. First, the principle of electrowetting applied in small and confined configurations is introduced and the cause of the failure of the dielectric layer is analyzed. Then, the function of the pixel structures is described to avoid display defects. Next, electric signal modulations are compared in terms of achieving good image quality and optical stability. Lastly, the methods are presented for color panel realization. It was concluded that multi-layer dielectrics, three-dimensional pixel structures, proper electric frequency-and-amplitude modulation and an RGB color panel are expected to resolve the current limitations and contribute to designing advanced reflective displays.