This critical review discusses the current understanding of the formation, transport, and merging of drops in microfluidics. We focus on the physical ingredients which determine the flow of drops in microchannels and recall classical results of fluid dynamics which help explain the observed behaviour. We begin by introducing the main physical ingredients that differentiate droplet microfluidics from single-phase microfluidics, namely the modifications to the flow and pressure fields that are introduced by the presence of interfacial tension. Then three practical aspects are studied in detail: (i) The formation of drops and the dominant interactions depending on the geometry in which they are formed.(ii) The transport of drops, namely the evaluation of drop velocity, the pressure-velocity relationships, and the flow field induced by the presence of the drop. (iii) The fusion of two drops, including different methods of bridging the liquid film between them which enables their merging.