Radio Frequency IDentification (RFID) has allowed the realization of ubiquitous tracking and monitoring of physical objects wirelessly with minimum human interactions. It plays a key role in a wide range of applications including asset tracking, contactless payment, access control, transportation and logistics, and other industrial applications. On the other side, RFID systems face several technical challenges that need to be overcome in order to achieve their potential benefits; tags collisions and localization of tagged objects are two important challenges. Numerous anti-collision and localization protocols have been proposed to address these challenges. This paper reviews the state-of-art tags’ anti-collision and localization protocols, and provides a deep insight into technical issues of these protocols. The probabilistic and deterministic anti-collision protocols are critically studied and compared in terms of different parameters. We further review distance estimation, scene analysis, and proximity localization schemes and provide useful suggestions. We also introduce a new hybrid direction that utilizes power control to spatially partition the interrogation range of a reader for more efficient anti-collision and localization. Finally, we present the applications of RFID systems in healthcare sectors.