The development of distribution networks for participation in active network management (ANM) and smart grids is introduced using the microgrid concept. In recent years, this issue has been researched and implemented by many experts. The second part of this paper describes those developed operational concepts of microgrids that have an impact on their participation in ANM and in the requirements for achieving targets. Power quality is the most challenging task in microgrids, especially when the system switches from normal parallel operation (grid-connected mode) to island operation. Indeed, following planned or unplanned transitions to island mode, microgrids may develop instability. For this reason, the paper addresses the principles behind island-detection methods, black-start operation, fault management, and protection systems, along with a comprehensive review of power quality. Finally, island detection and the other topics are summarized with a flowchart and tables.