Adding water to fuel droplets is known to lead to puffing and micro-explosion. Puffing and micro-explosion lead to a rapid increase in the liquid fuel surface area. This, in turn, leads to an increase in the fuel evaporation rate and the formation of a homogeneous fuel vapor/air mixture. The latter is important for improving the efficiency of combustion technologies, including those used in internal combustion engines. The effects produced by puffing and micro-explosion lead to a reduction in fuel consumption, improved fuel/air mixing, and a reduction in harmful emissions. The contributions of puffing and micro-explosion to fire extinguishing have also been discussed in many papers. In this paper, we review the state of the art in the investigation of composite droplet micro-explosion and discuss the sufficient conditions for the start of puffing/micro-explosion as well as child droplet characteristics.