This comprehensive review explores the applications and challenges of Digital Twin (DT) technology in smart grids. As power grid systems rapidly evolve to meet the increasing energy demands and the new requirements of renewable source integration, DTs offer promising solutions to enhance the monitoring, control, and optimization of these systems. In this paper, we examine the concept of DTs in the context of smart grids, and their requirements, challenges, and integration with the Internet of Things (IoT) and Artificial Intelligence (AI). We also discuss different applications in asset management, system operation, and disaster response. This paper analyzes current challenges, including data management, interoperability, cost, and ethical considerations. Through case studies from various sectors in Canada, we illustrate the real-world implementation and impact of DTs. Finally, we discuss emerging trends and future directions, highlighting the potential of DTs to revolutionize smart grid networks and contribute to more efficient, reliable, and sustainable power systems.