Tunneling Magnetoresistance (TMR) sensors have emerged as a leading technology in high-performance magnetic sensing, distinguished by their high sensitivity, low power consumption, and miniaturization. To address the evolving demands of cutting-edge applications like biomagnetic imaging and smart grid monitoring, continuous performance enhancement is crucial. This review systematically outlines the key strategies for optimizing TMR sensors, focusing on thin-film material engineering and sensitive microstructure design. Material advancements are dissected along two paths: developing high-sensitivity systems via MgO barriers and composite free layers, and creating wide-linear-range systems through anisotropy engineering, including both perpendicular (PMA) and in-plane (IMA) configurations, as well as dynamic methods like electric-field and strain modulation. Structurally, we highlight innovations such as vortex-state MTJs and magnetic flux concentrators to enhance linearity and sensitivity, alongside advanced noise modulation techniques that effectively suppress low-frequency 1/f noise. The practical impact of these optimizations is evidenced by TMR sensors now capable of measuring magnetocardiograms (MCG) outside shielded environments and providing high-accuracy current sensing in smart grids. Future development is directed towards novel material systems that balance high sensitivity with a wide linear range, the realization of monolithic three-axis vector sensors, and the deep integration of TMR technology with artificial intelligence for smart sensing systems. This work provides a comprehensive reference for advancing TMR sensor technology and its applications in high-precision magnetic field detection.