In recent years, electric vehicles (EVs) have become increasingly popular, bringing about fundamental shifts in transportation to reduce greenhouse effects and accelerate progress toward decarbonization. The role of EVs has also experienced a paradigm shift for future energy networks as an active player in the form of vehicle-to-grid, grid-to-vehicle, and vehicle-to-vehicle technologies. EVs spend a significant part of the day parked and have a remarkable potential to contribute to energy sustainability as backup power units. In this way, EVs can be connected to the grid as stationary power units, providing a range of services to the power grid to increase its reliability and resilience. The available systems show that EVs can be used as alternative energy sources for various network systems like smart grids, microgrids, and virtual power plants besides transportation. While the grid–EV connection offers various contributions, it also has some limitations and effects. In this context, the current study highlights the power system impacts and key contributions of EVs connected to smart grids. Regarding the power system impacts in case of EV integration into smart grids, the challenges and difficulties are categorized under the power system stability, voltage/current distortions, load profile, and power losses. Voltage/current distortions like sags, unbalances, harmonics, and supraharmonics are also detailed in the study. Subsequently, the key contributions to the smart grid in terms of energy management, grid-quality support, grid balancing, and socio-economic impacts are explained. In the energy management part, issues such as power flow, load balancing, and renewable energy integration are elaborated. Then, the fault ride-through capability, reactive power compensation, harmonic mitigation, and grid loss reduction are presented to provide information on power quality enhancement. Lastly, the socio-economic impacts in terms of employment, net billing fees, integration with renewable energy sources, and environmental effects are elucidated in the present study.