The advent of information and communication technologies has paved the way for smart cities. Residential customers are the major consumers of electrical energy in such cities. Smart meters gather the energy consumption behavior of consumers at the aggregate/household level. Characterization of aggregate demand data has several advantages but significant benefits in terms of energy sustainability require Appliance Level Energy Characterization (ALEC). Various solutions for ALEC rely on sensors, smart plugs, smart appliances, smart meters and/or energy disaggregation algorithms but smart meters with built-in energy disaggregation algorithms seem to be the most scalable option. This work is one of the pioneering contributions to present comprehensive applications and prospects of ALEC for smart residential communities. It also links these applications with 2050 decarbonization pathways and various United Nations (UN) sustainable development goals (SDGs). Prospective uses of ALEC in diverse fields such as power systems, health care, the social sciences, economics, surveillance, marketing, appliance manufacturing, technology development, etc. are highlighted. Moreover, the requirements and challenges hindering the largescale deployment of the ALEC frameworks are outlined with some recommendations and open research directions. It is envisaged that ALEC of residential electricity can be exploited not only for achieving 2050 decarbonization targets but also for several 2030 SDGs. This work will provide a one-stop source of information on ALEC and will open the doors of cooperation among various stakeholders of smart cities to achieve long-term SDGs.