Proppant crushing and embedment in hydraulically-induced fractures is a major drawback to the recovery of unconventional oil/gas and geothermal energy production. This study provides a grain-scale analysis of the fracture evolution mechanisms of proppant crushing, rock fracture damage during proppant embedment, the influence of realistic reservoir/fracture fluid on proppant embedment, and the behaviour of proppant packs subjected to in-situ stresses using a discrete element modelling (DEM) approach. The results of this study reveal that the selection of an appropriate proppant type based on the nature of the reservoir formation plays a vital part in quantifying the degree of proppant crushing and embedment within fractures. The utilisation of frac-sand proppants instead of ceramic proppants in shallow soft sedimentary-based siltstone formations reduces proppant embedment up to 88%. However, whatever the depth of the fracture, the injection of ceramic proppants into granite-based geothermal formations is preferred to that of frac-sand proppants due to their lower proppant embedment and greater crush resistance. DEM analysis detected rock-spalling during the proppant embedment process, which ultimately led to the initiation of tensile-dominant secondary fractures in rocks. Fracture initiation, propagation, and coalescence during proppant crushing are analysed using calibrated DEM proppant-rock assemblies. Importantly, this study reveals that the saturation of formation rocks with fracturing/reservoir fluids may cause a significant increase in proppant embedment. Furthermore, proppant crushing, embedment, and re-arrangement mechanisms in proppant packs with different proppant distributions are analysed in this comprehensive numerical study.