A novel neutron source with high brightness, short pulse, and compact-size--LDNS (laser-driven neutron source) offers considerable promise for a wide range of applications, including non-destructive material testing, neutron imaging, neutron resonance spectroscopy, and nuclear astrophysics, positioning it as a vital supplement to conventional neutron sources. Beginning with an overview of the production methods for LDNS, the fundamental principles were outlined behind various production mechanisms. By reviewing the historical development and recent progress of LDNS, the substantial potential of it for both fundamental research and practical applications was highlighted. Diagnostic techniques and its principles for characterizing key parameters of LDNS were systematically introduced, with special emphasis on recent advances at home and abroad in measuring neutron yield, energy, pulse duration, and source size. Basing on above, this review proceeds to identify technical challenges in the development of LDNS and concludes with a perspective on future research directions.