The battery technology progress has been a contradictory process in which performance improvement and hidden risks coexist. Now the battery is still a “black box”, thus requiring a deep understanding of its internal state. The battery should “sense its internal physical/chemical conditions”, which puts strict requirements on embedded sensing parts. This paper summarizes the application of advanced optical fiber sensors in lithium-ion batteries and energy storage technologies that may be mass deployed, focuses on the insights of advanced optical fiber sensors into the processes of one-dimensional nano–micro-level battery material structural phase transition, electrolyte degradation, electrode–electrolyte interface dynamics to three-dimensional macro-safety evolution. The paper contributes to understanding how to use optical fiber sensors to achieve “real” and “embedded” monitoring. Through the inherent advantages of the advanced optical fiber sensor, it helps clarify the battery internal state and reaction mechanism, aiding in the establishment of more detailed models. These advancements can promote the development of smart batteries, with significant importance lying in essentially promoting the improvement of system consistency. Furthermore, with the help of smart batteries in the future, the importance of consistency can be weakened or even eliminated. The application of advanced optical fiber sensors helps comprehensively improve the battery quality, reliability, and life.