Buildings are significant contributors to global energy consumption, necessitating urgent action to reduce energy use and associated emissions. Urban Building Energy Modeling (UBEM) is a critical tool that provides essential insights into citywide building energy dynamics though generating quantitative energy data and enabling holistic analysis and optimization of energy systems. However, current UBEM methodologies and tools are constrained by their reliance on non-urban-specific and aggregated climate data inputs, leading to discrepancies between modeled and actual energy expenditures. This article presents a comprehensive review of the datasets, tools, methodologies, and novel case studies deployed to integrate microclimates into UBEMs, aiming to bridge the modeling gap and to address the uncertainties due to the absence of real-world microclimate data in the models. It expands beyond conventional methods by elaborating on substitutional observational-based and simulation-based datasets, addressing their spatial and temporal tradeoffs. The review highlights that while remote sensing technologies are extensively utilized for building geometric data UBEM inputs, there remains an underexplored potential in reanalysis and observational-based products for environmental data; specifically, for the inclusion of parameters that are conventionally not included in UBEM analysis such as tree canopy coverage and land surface temperature. Furthermore, adopting a hybrid methodology, which combines observational and simulation-based datasets, may be a promising approach for more accurately representing microclimate conditions in UBEMs; as this process would ensure more representative climate parameter inputs and ground-truthing, while effectively managing computational demands across extensive temporal and spatial simulations. This could be achieved through integrating local earth observation datasets with computational fluid dynamics (CFD) tools or by merging local earth observational data with simulation-based reanalysis products and coupling these weather inputs with simulation-based building energy management models. Finally, this review underscores the importance of validating UBEMs with local microclimate weather data to ensure that model results are actionable, reliable, and accurate.