Smart capsules are developing at a tremendous pace with a promise to become effective clinical tools for the diagnosis and monitoring of gut health. This field emerged in the early 2000s with a successful translation of an endoscopic capsule from laboratory prototype to a commercially viable clinical device. Recently, this field has accelerated and expanded into various domains beyond imaging, including the measurement of gut physiological parameters such as temperature, pH, pressure and gas sensing, and the development of sampling devices for better insight into gut health. In this review, the status of smart capsules for sensing gut parameters is presented to provide a broad picture of these state-of-the-art devices while focusing on the technical and clinical challenges the devices need to overcome to realise their value in clinical settings. Smart capsules are developed to perform sensing operations throughout the length of the gut to better understand the body’s response under various conditions. Furthermore, the prospects of such sensing devices are discussed that might help readers, especially health practitioners, to adapt to this inevitable transformation in healthcare. As a compliment to gut sensing smart capsules, significant amount of effort has been put into the development of robotic capsules to collect tissue biopsy and gut microbiota samples to perform in-depth analysis after capsule retrieval which will be a game changer for gut health diagnosis, and this advancement is also covered in this review. The expansion of smart capsules to robotic capsules for gut microbiota collection has opened new avenues for research with a great promise to revolutionise human health diagnosis, monitoring and intervention.