Over the past decade, the world’s electrical grid infrastructure has experienced rapid growth in the integration of grid-edge inverter-based distributed energy resources (DERs). This has led to operating concerns associated with reduced system inertia, stability and intermittent renewable power generation. However, advanced or “smart” inverters can provide grid services such as volt-VAR, frequency-Watt, and constant power factor capabilities to help sustain reliable grid and microgrid operations. To address the challenges and accelerate the benefits of smart inverter integration, new approaches are needed to test both the impacts of inverter-based resources (IBRs) on the grid as well as the impacts of changing grid conditions on the operation of IBRs. Power hardware-in-the-loop (PHIL) stands out as a strong testing solution, enabling a real-time simulated power system to be interfaced to hardware devices such as inverters which can be implemented to determine interactions between multiple inverters at multiple points of common coupling on the grid and microgrids. This paper presents a review of PHIL for grid and microgrid applications including recent advancements and requirements such as real-time simulators, hardware interfaces and communication and stability considerations. An illuminating case study is summarized followed by exemplary PHIL testbed developments around the world, concluding with a proposed research paradigm to advance the integration of smart grid-following and grid-forming inverters.