This article reviews direct and indirect methods developed for dynamic line rating on overhead lines, and their applications (reduction of bottlenecks, congestion costs, load shedding, among others) in the operation and control of power systems as smart grid technology. Besides, four elements for line rating computation and monitoring are identified, these are: sensors, communications, management information system and information analysis tools, which are part of integral dynamic line rating systems. Finally, the benefits and challenges of using phasor measurement units for real time capacity estimation on overhead lines are analyzed, highlighting the impact of weather changes along the entire line.