Teleost fishes are the most diverse group of vertebrates on Earth. On tropical coral reefs, their species richness exceeds 6000 species; one tenth of total vertebrate biodiversity. A large proportion of this diversity is composed of cryptobenthic reef fishes (CRFs): bottom-dwelling, morphologically or behaviourally cryptic species typically less than 50 mm in length. Yet, despite their diversity and abundance, these fishes are both poorly defined and understood. Herein we provide a new quantitative definition and synthesise current knowledge on the diversity, distribution and life history of CRFs. First, we use size distributions within families to define 17 core CRF families as characterised by the high prevalence (>10%) of small-bodied species (<50 mm). This stands in strong contrast to 42 families of large reef fishes, in which virtually no small-bodied species have evolved. We posit that small body size has allowed CRFs to diversify at extremely high rates, primarily by allowing for fine partitioning of microhabitats and facilitation of allopatric reproductive isolation; yet, we are far from understanding and documenting the biodiversity of CRFs. Using rates of description since 1758, we predict that approximately 30 new species of cryptobenthic species will be described per year until 2050 (approximately twice the annual rate compared to large fishes). Furthermore, we predict that by the year 2031, more than half of the described coral reef fish biodiversity will consist of CRFs. These fishes are the 'hidden half' of vertebrate biodiversity on coral reefs. Notably, global geographic coverage and spatial resolution of quantitative data on CRF communities is uniformly poor, which further emphasises the remarkable reservoir of biodiversity that is yet to be discovered. Although small body size may have enabled extensive diversification within CRF families, small size also comes with a suite of ecological challenges that affect fishes' capacities to feed, survive and reproduce; we identify a range of life-history adaptations that have enabled CRFs to overcome these limitations. In turn, these adaptations bestow a unique socio-ecological role on CRFs, which includes a key role in coral reef trophodynamics by cycling trophic energy provided by microscopic prey to larger consumers. Although small in body size, the ecology and evolutionary history of CRFs may make them a critical component of coral-reef food webs; yet our review also shows that these fishes are highly susceptible to a variety of anthropogenic disturbances. Understanding the consequences of these changes for CRFs and coral reef ecosystems will require us to shed more light on this frequently overlooked but highly diverse and abundant guild of coral reef fishes.