This comprehensive review highlights recent breakthroughs in hydrophobic adsorbent technology for efficient CO2 capture in industrial post-combustion wet flue gas and direct air capture applications. The presence of high H2O partial pressures in post-combustion flue gas (5-15 kPa, at 50-150 degrees C) and air streams (0.8-3.2 kPa, at 20-40 degrees C) significantly impedes CO2 capture efficiency. This is attributed to the preferential adsorption of H2O molecules onto the active sites of the adsorbent, thereby competing with CO2 for binding sites. This review provides a comprehensive overview of key studies on enhancing physiadsorbents hydrophobicity, highlighting the role of diverse hydrophobic agents including fluoropolymers, organosilanes, alkyl silanes and synthetic resins. State-of-the-art technologies including dealumination, pore engineering, surface grafting, in-situ synthesis, and sol-gel method are also discussed. Thermodynamic parameters, surface chemistry, and pore topology have been found to significantly impact the adsorption of CO2 and H2O, as revealed by our analysis combining experimental data and simulations. This integrated approach provides a detailed understanding of competitive adsorption processes, explaining the intricate interactions between CO2, H2O, and adsorbents. Furthermore, this review highlights the performance of hydrophobic adsorbents in humid flue gas and direct air capture. This present study explores the current challenges and future scope of CO2 capture, including critical factors like computational modelling to construct sustainable hydrophobic agents and superhydrophobic surfaces for stable CO2 adsorption. To date, a significant gap exists in the literature, as no single, comprehensive review has examined diverse modification strategies and hydrophobic agents for designing hydrophobic zeolites, MOFs, and carbon-based materials for humid flue gas and direct air CO2 capture.