All‐aqueous phase separation systems play essential roles in bioanalytical and biochemical applications. Compared to conventional oil and organic solvent‐based systems, these systems are characterized by their rich bulk and interfacial properties, offering superior biocompatibility. In particular, phase separation in all‐aqueous systems facilitates the creation of compartments with specific physicochemical properties, and therefore largely enhances the accessibility of the systems. In addition, the all‐aqueous compartments have diverse affinities, with an important property known as partitioning, which can concentrate (bio)molecules toward distinct immiscible phases. This partitioning affinity imparts all‐aqueous interfaces with selective permeability, enabling the controlled enrichment of target (bio)molecules. This review introduces the basic principles and applications of partitioning‐induced interfacial phenomena in a typical all‐aqueous system, namely aqueous two‐phase systems (ATPSs); these applications include interfacial chemical reactions, bioprinting, and assembly, as well as bio‐sensing and detection. The primary challenges associated with designing all‐aqueous phase separation systems and several future directions are also discussed, such as the stabilization of aqueous interfaces, the handling of low‐volume samples, and exploration of suitable ATPSs compositions with the efficient protocol.