Membrane separation technology has significant advantages for treating oil-in-water emulsions. Understanding the evolution of oil droplets could reveal the interfacial and colloidal interactions, facilitate the design of advanced membranes, and improve the separation performances. This review on the characteristic behavior and evolution of oil droplets focuses on the advanced analytical techniques, and the subsequent fouling as well as demulsification effects during membrane separation. A detailed introduction is provided on microscopic observations and numerical simulations of the dynamic evolution of oil droplets, featuring real-time in-situ visualization and accurate reconstruction, respectively. Characteristic behaviors of these oil droplets include attachment, pinning, wetting, spreading, blockage, intrusion, coalescence, and detachment, which have been quantified by specific proposed parameters and criteria. The fouling process can be evaluated using Hermia and resistance models. The related adhesion force and intrusion pressure as well as droplet–droplet/membrane interfacial interactions can be accurately quantified using various force analysis methods and advanced force measurement techniques. It is encouraging to note that oil coalescence has been achieved through various effects such as electrostatic interactions, mechanical actions, Laplace pressure/surface free energy gradients, and synergistic effects on functional membranes. When oil droplets become destabilized and coalesce into larger ones, the functional membranes can overcome the limitations of size-sieving effect to attain higher separation efficiency. This not only bypasses the trade-off between permeability and rejection, but also significantly reduces membrane fouling. Finally, the challenges and potential research directions in membrane separation are proposed. We hope this review will support the engineering of advanced materials for oil/water separation and research on interface science in general.