Virtual reality technologies (VRTs) are high-tech human–computer interfaces used to develop digital content and can be applied to multiple different areas, often offering innovative solutions to existing problems. A wide range of digital games is being also developed with VRTs and together with their components, the games' structural elements are appealing to children and engaging them more in virtual worlds. Our research interest is directed towards children's development and the effects of VRTs within gaming environments. Contemporary psychology studies perceive human development as a holistic and lifelong process with important interrelationships between physical, mental, social and emotional aspects. For the objectives and scope of this work, we examine children development across three domains: physical, cognitive and psychosocial. In this context, the authors review the literature on the impact of VRTs on children, in terms of software and hardware. Since research requires an wide-ranging approach, we study the evidence reported on the brain and neural structure, knowledge, behaviour, pedagogy, academic performance, and wellness. Our main concern is to outline the emerging ethical issues and worries of parents, educators, ophthalmologists, neurologists, psychologists, paediatricians and all relevant scientists, as well as the industry’s views and actions. The systematic review was performed on the databases Scopus, IEEE Xplore, PubMed, and Google Scholar from 2010 to 2020 and 85 studies were selected. The review concluded that findings remain contradictory especially for the psychosocial domain. Official recommendations from organizations and well-documented researches by academics on child well-being are reassuring if health and safety specifications and particularly the time limit are met. Research is still ongoing, constantly updated and consist of a priority for the scientific community given that technology evolves.