This comprehensive review investigates the transformative potential of sensor-driven digital twin technology in enhancing healthcare delivery within smart environments. We explore the integration of smart environments with sensor technologies, digital health capabilities, and location-based services, focusing on their impacts on healthcare objectives and outcomes. This work analyzes the foundational technologies, encompassing the Internet of Things (IoT), Internet of Medical Things (IoMT), machine learning (ML), and artificial intelligence (AI), that underpin the functionalities within smart environments. We also examine the unique characteristics of smart homes and smart hospitals, highlighting their potential to revolutionize healthcare delivery through remote patient monitoring, telemedicine, and real-time data sharing. The review presents a novel solution framework leveraging sensor-driven digital twins to address both healthcare needs and user requirements. This framework incorporates wearable health devices, AI-driven health analytics, and a proof-of-concept digital twin application. Furthermore, we explore the role of location-based services (LBS) in smart environments, emphasizing their potential to enhance personalized healthcare interventions and emergency response capabilities. By analyzing the technical advancements in sensor technologies and digital twin applications, this review contributes valuable insights to the evolving landscape of smart environments for healthcare. We identify the opportunities and challenges associated with this emerging field and highlight the need for further research to fully realize its potential to improve healthcare delivery and patient well-being.