Traditional regional or annual average electricity carbon emission factors struggle to accurately reflect the temporal and spatial variations in carbon emissions associated with electricity consumption, making it difficult to support refined low-carbon management needs such as demand-side response, green electricity trading, and carbon footprint accounting. The Time-Sharing and Zonal Electricity Carbon Emission Factor (TSZ-ECF), a key metric that dynamically characterizes the marginal carbon emission intensity per unit of electricity consumption across different time periods and grid nodes (or regions), has garnered widespread attention in academia and industry in recent years. This paper systematically reviews the theoretical foundations of TSZ-ECF, mainstream accounting methods, their advantages and disadvantages, and applicable scenarios. It focuses on analyzing the application value and practical progress of TSZ-ECF in areas such as electricity market mechanism design, user-side carbon management, grid planning and operation, and policy formulation. Finally, the paper delves into the key challenges faced in current research and outlines future research directions for TSZ-ECF. This review aims to provide researchers and practitioners in related fields with a comprehensive overview of the current state of research, promoting the advancement of TSZ-ECF theory, methodologies, and applications to support the low-carbon transition of power systems and the achievement of “Carbon Neutrality and Carbon Peaking” goals.