Single-cell techniques have become more and more incorporated in cell biological research over the past decades. Various approaches have been proposed to isolate, culture, sort, and analyze individual cells to understand cellular heterogeneity, which is at the foundation of every systematic cellular response in the human body. Microfluidics is undoubtedly the most suitable method of manipulating cells, due to its small scale, high degree of control, and gentle nature toward vulnerable cells. More specifically, the technique of microfluidic droplet production has proven to provide reproducible single-cell encapsulation with high throughput. Various in-droplet applications have been explored, ranging from immunoassays, cytotoxicity assays, and single-cell sequencing. All rely on the theoretically unlimited throughput that can be achieved and the monodispersity of each individual droplet. To make these platforms more suitable for adherent cells or to maintain spatial control after de-emulsification, hydrogels can be included during droplet production to obtain “microgels.” Over the past years, a multitude of research has focused on the possibilities these can provide. Also, as the technique matures, it is becoming clear that it will result in advantages over conventional droplet approaches. In this review, we provide a comprehensive overview on how various types of hydrogels can be incorporated into different droplet-based approaches and provide novel and more robust analytic and screening applications. We will further focus on a wide range of recently published applications for microgels and how these can be applied in cell biological research at the single- to multicell scale.