Smart living, an increasingly prominent concept, entails incorporating sophisticated technologies in homes and urban environments to elevate the quality of life for citizens. A critical success factor for smart living services and applications, from energy management to healthcare and transportation, is the efficacy of human action recognition (HAR). HAR, rooted in computer vision, seeks to identify human actions and activities using visual data and various sensor modalities. This paper extensively reviews the literature on HAR in smart living services and applications, amalgamating key contributions and challenges while providing insights into future research directions. The review delves into the essential aspects of smart living, the state of the art in HAR, and the potential societal implications of this technology. Moreover, the paper meticulously examines the primary application sectors in smart living that stand to gain from HAR, such as smart homes, smart healthcare, and smart cities. By underscoring the significance of the four dimensions of context awareness, data availability, personalization, and privacy in HAR, this paper offers a comprehensive resource for researchers and practitioners striving to advance smart living services and applications. The methodology for this literature review involved conducting targeted Scopus queries to ensure a comprehensive coverage of relevant publications in the field. Efforts have been made to thoroughly evaluate the existing literature, identify research gaps, and propose future research directions. The comparative advantages of this review lie in its comprehensive coverage of the dimensions essential for smart living services and applications, addressing the limitations of previous reviews and offering valuable insights for researchers and practitioners in the field.