LiDAR sensors have great potential for enabling crop recognition (e.g., plant height, canopy area, plant spacing, and intra-row spacing measurements) and the recognition of agricultural working environments (e.g., field boundaries, ridges, and obstacles) using agricultural field machinery. The objective of this study was to review the use of LiDAR sensors in the agricultural field for the recognition of crops and agricultural working environments. This study also highlights LiDAR sensor testing procedures, focusing on critical parameters, industry standards, and accuracy benchmarks; it evaluates the specifications of various commercially available LiDAR sensors with applications for plant feature characterization and highlights the importance of mounting LiDAR technology on agricultural machinery for effective recognition of crops and working environments. Different studies have shown promising results of crop feature characterization using an airborne LiDAR, such as coefficient of determination (R2) and root-mean-square error (RMSE) values of 0.97 and 0.05 m for wheat, 0.88 and 5.2 cm for sugar beet, and 0.50 and 12 cm for potato plant height estimation, respectively. A relative error of 11.83% was observed between sensor and manual measurements, with the highest distribution correlation at 0.675 and an average relative error of 5.14% during soybean canopy estimation using LiDAR. An object detection accuracy of 100% was found for plant identification using three LiDAR scanning methods: center of the cluster, lowest point, and stem–ground intersection. LiDAR was also shown to effectively detect ridges, field boundaries, and obstacles, which is necessary for precision agriculture and autonomous agricultural machinery navigation. Future directions for LiDAR applications in agriculture emphasize the need for continuous advancements in sensor technology, along with the integration of complementary systems and algorithms, such as machine learning, to improve performance and accuracy in agricultural field applications. A strategic framework for implementing LiDAR technology in agriculture includes recommendations for precise testing, solutions for current limitations, and guidance on integrating LiDAR with other technologies to enhance digital agriculture.