Optical frequency domain reflectometry (OFDR) technology has become one of the core technologies for fiber optic diagnosis and precision measurement. It converts the nonlinearity of optical frequency scanning into compensable phase errors and combines frequency domain signal processing to achieve centimeter level spatial resolution and long-distance measurement. However, the nonlinearity and phase noise of tunable laser frequency scanning can affect the equal frequency sampling of the system, causing reflection broadening and distance deviation. Therefore, nonlinear compensation becomes the key to improving system performance. The research on nonlinear compensation mainly focuses on two aspects: hardware and algorithm. On the one hand, by adjusting the hardware structure of the system, equal frequency interval sampling can be achieved to suppress sweep nonlinearity at the front end while considering range and resolution. On the other hand, at the level of digital signal processing, various algorithms are used to improve spatial resolution and signal-to-noise ratio without the need for additional complex optical paths. This article will introduce the basic principles of OFDR sensing and demodulation, analyze the factors that affect the performance of OFDR systems such as spatial resolution and sensing distance, and focus on summarizing the research progress of key technologies in improving the performance of OFDR systems. Finally, the problems existing in OFDR and the future development trends are proposed.