This comprehensive review explores the transformative potential of sensor-driven digital twin technology in enhancing healthcare delivery within smart environments. The paper integrates smart environments with sensor technologies, digital health capabilities, and location-based services, focusing on their impacts on healthcare objectives and outcomes. It analyzes foundational technologies such as the Internet of Things (IoT), Internet of Medical Things (IoMT), machine learning (ML), and artificial intelligence (AI), which underpin the functionalities within smart environments. The review highlights the unique characteristics of smart homes and smart hospitals, emphasizing their potential to revolutionize healthcare through remote patient monitoring, telemedicine, and real-time data sharing. A novel solution framework leveraging sensor-driven digital twins is presented, incorporating wearable health devices, AI-driven health analytics, and a proof-of-concept digital twin application. The role of location-based services (LBS) in enhancing personalized healthcare interventions and emergency response capabilities is also examined. By analyzing technical advancements and applications, the review contributes valuable insights to the evolving landscape of smart environments for healthcare, identifying opportunities and challenges and highlighting the need for further research to fully realize the potential of this emerging field.This comprehensive review explores the transformative potential of sensor-driven digital twin technology in enhancing healthcare delivery within smart environments. The paper integrates smart environments with sensor technologies, digital health capabilities, and location-based services, focusing on their impacts on healthcare objectives and outcomes. It analyzes foundational technologies such as the Internet of Things (IoT), Internet of Medical Things (IoMT), machine learning (ML), and artificial intelligence (AI), which underpin the functionalities within smart environments. The review highlights the unique characteristics of smart homes and smart hospitals, emphasizing their potential to revolutionize healthcare through remote patient monitoring, telemedicine, and real-time data sharing. A novel solution framework leveraging sensor-driven digital twins is presented, incorporating wearable health devices, AI-driven health analytics, and a proof-of-concept digital twin application. The role of location-based services (LBS) in enhancing personalized healthcare interventions and emergency response capabilities is also examined. By analyzing technical advancements and applications, the review contributes valuable insights to the evolving landscape of smart environments for healthcare, identifying opportunities and challenges and highlighting the need for further research to fully realize the potential of this emerging field.