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Game theory-based approaches have recently gained traction in a wide range of applications, importantly in power and energy systems. With the onset of cooperation as a new perspective for solving power system problems, as well as the nature of power system problems, it is now necessary to seek appropriate game theory-based tools that permit the investigation and analysis of the behavior and relationships of various players in power system problems. In this context, this paper performs a literature review on coalitional game theory's most recent advancements and applications in power and energy systems. First, we provide a brief overview of the coalitional game theory's fundamental ideas, current theoretical advancements, and various solution concepts. Second, we examine the recent applications in power and energy systems. Finally, we explore the challenges, limitations, and future research possibilities with applications in power and energy systems in the hopes of furthering the literature by strengthening the applications of coalitional game theory in power and energy systems.