In the pursuit of understanding life, model membranes made of phospholipids were envisaged decades ago as a platform for the bottom-up study of biological processes. Micron-sized lipid vesicles have gained great acceptance as their bilayer membrane resembles the natural cell membrane. Important biological events involving membranes, such as membrane protein insertion, membrane fusion, and intercellular communication, will be highlighted in this review with recent research updates. We will first review different lipid bilayer platforms used for incorporation of integral membrane proteins and challenges associated with their functional reconstitution. We next discuss different methods for reconstitution of membrane fusion and compare their fusion efficiency. Lastly, we will highlight the importance and challenges of intercellular communication between synthetic cells and synthetic cells-to-natural cells. We will summarize the review by highlighting the challenges and opportunities associated with studying membrane–membrane interactions and possible future research directions.