Hybrid nanofluids (suspensions of two or more classes of nanoparticles) have proved to be the formidable alternatives to traditional coolants that could be used in the case of compact and micro heat exchangers. Hybrid nanofluids can be used to combine the benefits of various nanoparticles at a base fluid to provide an improved thermal conductivity, convective heat transfer and of a heat exchanger in general. This is a critical review to understand the new developments in the field of application in thermal systems, its mechanisms and issues. It discusses the important performance issues of the type of nanoparticles, the nanoparticles concentration, fluid viscosity, and operating temperature, with the relationship each one has on thermal performance. It is also discussed how to design elaborate hybrid nanofluids to be integrated into narrow-board heat exchangers, such as behavior of flow in laminar and turbulent condition, stability, and sedimentation of such nanoparticles. Although it has proved beneficial in terms of its performance, significant challenges still exist, the most prominent of them being cost-effectiveness, dispersion stability, and feasibility of mass production. A number of solutions are discussed to develop new technologies, such as using AI to optimize thermal usage, one-pot synthesis approaches, and applications with smart sensors, as they provide an opportunity to increase the scale of industries. Also, regulatory, environmental, and sustainability factors are considered, and the necessity of environmentally friendly materials and the lifecycle analysis is highlighted. On the whole, it can be said that hybrid nanofluids are an extremely promising niche in thermal management, yet the full commercial potential of hybrid nanofluids in the industry will be achievable only in case of multidisciplinary cooperation and fresh design schemes.