The 21st century has witnessed an unprecedented transformation in the way information is generated, organized, accessed, and disseminated. Digital libraries have emerged as a central component of this transformation, extending traditional library services beyond physical boundaries and enabling global access to knowledge resources. This paper examines the growth of digital libraries in the 21st century through a comprehensive and systematic review of recent literature (2018–2024). It analyzes the evolution, technological drivers, benefits, challenges, and future directions of digital libraries. The study highlights the increasing role of digital libraries in education, research, and knowledge democratization. It also critically evaluates key challenges such as the digital divide, copyright issues, and cybersecurity concerns. The findings suggest that while digital libraries significantly enhance accessibility and efficiency, sustainable development requires policy support, technological innovation, and user-centric approaches.