Carbon quantum dots (CDs) are a relatively new class of carbon nanomaterials which have been studied very much in the last fifteen years to improve their already favorable properties. The optical properties of CDs have drawn particular interest as they display the unusual trait of excitation-dependent emission, as well as high fluorescence quantum yields (QY), long photoluminescence (PL) decay lifetimes, and photostability. These qualities naturally lead researchers to apply CDs in the field of imaging (particularly bio-imaging) and sensing. Since the amount of publications regarding CDs has been growing nearly exponentially in the last ten years, many improvements have been made in the optical properties of CDs such as QY and PL lifetime. However, a great deal of confusion remains regarding the PL mechanism of CDs as well as their structural properties. Therefore, presented in this review is a summary and discussion of the QYs and PL lifetimes reported in recent years. The effect of method as well as precursor has been evaluated and discussed appropriately. The current theories regarding the PL mechanism of CDs are discussed, with special attention to the concept of surface state-controlled PL. With this knowledge, the improvement of preparation and applications of CDs related to their optical properties will be easily accomplished. Further improvements can be made to CDs through the understanding of their structural and optical properties.