The phase-sensitive optical time domain reflectometry (Φ-OTDR) utilizes distributed Rayleigh scattering sensing to achieve sensing, and it has the advantages of high sensitivity and fast response speed to environmental disturbances. It has become one of the most important branches in the field of distributed optical fiber sensing. However, the high-coherence lightwave of Φ-OTDR will inevitably induce interference fading during the scattering process, and the corresponding positions will become blind zones for the sensing system. Fading phenomenon has been a research focus in this field for many years. In this paper, we first briefly describe the generation mechanism and mathematical characteristics of interference fading. Then, typical sensing mechanisms of Φ-OTDR are systematically introduced, as well as the influence of interference fading on the sensing signal demodulation. In addition, the research progress of anti-interference fading technologies is comprehensively reviewed. Finally, the future developments of Φ-OTDR are discussed.