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Virtual power plants (VPPs) are promising solutions to address the decarbonization and energy efficiency goals in the smart energy grid. They assume the coordination of local energy resources such as energy generation, storage, and consumption. They are used to tackle problems brought by the stochastic nature of renewable energy, lack of energy storage devices, or insufficient local energy flexibility on the demand side. VPP modeling, management, and optimization are open to research problems that should consider, on one side, the local constraints in the operation of the energy resources and power flows and the energy grid’s sustainability objectives on the other side. There are multiple goals to create a VPP, such as to deliver energy services on a market or to the grid operator, to operate a microgrid in autonomy decoupled from the main grid, or to sustain local energy communities. In this paper, we present the results of a narrative review carried out on the domain of VPP optimization for the local energy grid integration. We have defined a search strategy that considers highly rated international databases (i.e., Elsevier, IEEE, and MDPI) in a six-year timeframe and applied objective inclusion/exclusion criteria for selecting articles and publications for the review; 95 articles have been analyzed and classified according to their objectives and solutions proposed for optimizing VPP integration in smart grids. The results of the study show that VPP concepts and applications are well addressed in the research literature, however, there is still work to be done on: engaging prosumers and citizens in such a virtual organization, developing …