Defects in optical coatings are a major factor degrading their performance. Based on the nature of defects, we classified them into two categories: visible defects and non-visible defects. Visible defects result from the replication of substrate imperfections or particulates within the coatings by subsequent layers and can increase scattering loss, produce critical errors in extreme ultraviolet lithography, weaken mechanical and environmental stability, and reduce laser damage resistance. Non-visible defects mainly involve a decrease in laser damage resistance but typically have no influence on other properties of optical coatings. In the case of widely used HfO 2 /SiO 2 dielectric coatings, metallic Hf nano-clusters, off-stoichiometric HfO 2 nano-clusters, or areas of high-density electronic defects have been postulated as possible sources for non-visible defects. The emphasis of this review is devoted to discussing localized defect-driven laser-induced damage (LID) in optical coatings used for nanosecond-scale pulsed laser applications, but consideration is also given to other properties of optical coatings such as scattering, environmental stability, etc. The low densities and diverse properties of defects make the systematic study of LID initiating from localized defects time-consuming and very challenging. Experimental and theoretical studies of localized defect-driven LID using artificial defects whose properties can be well controlled are highlighted.