Aerosols mainly influence cloud formation and precipitation by regulating the radiative energy balance and altering cloud droplet properties through aerosol-cloud interactions. This paper provides a comprehensive review of the microphysical effects of aerosols. As cloud condensation nuclei or ice nuclei, aerosols can significantly alter the radiative and microphysical characteristics of clouds. An increase in aerosol concentration can lead to smaller cloud droplet sizes, increasing the cloud albedo to shortwave radiation, referred to cloud albedo effect. Simultaneously, aerosols can enhance the longwave radiation emitted by thiner clouds, blocking more longwave radiation in atmosphere, which is known as the cloud thermal emissivity effect. However, absorbing aerosols may promote cloud droplet evaporation, thus reducing the cloud albedo. Ferthermore, aerosols have significant impact on precipitation. When water vapor is insufficient or wind shear is strong, an increase in cloud droplet and a reduction in droplet effective radius can suppress precipitation and extend the cloud"s lifetime. However, when clouds develop more deeply, more and smaller droplets can be transported above the 0°C level, where freezing releases latent heat, promoting convective rainfall. Therefore, the microphysical effects of aerosols can suppress weak precipitation and enhance strong precipitation, leading to an increase in extreme weather events. However, many studies have observed phenomena that are inconsistent with these theories. To explain these discrepancies, this paper systematically presents four physical mechanisms behind aerosol-cloud interactions: condensation and evaporation effects, water vapor competition effects, collision and coalescence effects, and entrainment effects. The competition among these mechanisms leads to the varied results observed in studies. Finally, the paper discusses the challenges and future research directions, with an emphasis on enhancing observational data capabilities, developing a comprehensive framework for aerosol-cloud interactions under varying conditions, optimizing parameterization schemes, and advancing the application of artificial intelligence.