Advances in biomedical engineering and Artificial Intelligence (AI) have resulted in the creation of smart bandages that can monitor wounds in real-time and treat them automatically. These intelligent systems combine ultra-low-power machine learning models, wireless communication, and smart sensors to monitor wound parameters like pH, temperature, and moisture continuously. Deep learning algorithms such as Efficient-Net and YOLOv8s-cls allow for precise wound classification and predictive analysis, while biocompatible materials such as chitosan-infused bio-patches allow for natural healing. Remote monitoring and on-demand drug delivery are also provided by the bandages, and they are hence ideal for telemedicine and chronic wound care. Though integration challenges, cost issues, and privacy concerns regarding data pose challenges, these technologies present a scalable, energy-efficient, and patient-friendly solution to wound care. Through the convergence of diagnostics, treatment, and connectivity, Artificial Intelligence (AI)-enabled smart bandages are a promising move towards more individualized, effective, and accessible healthcare interventions. This paper gives a comprehensive review of the technologies, applications, and future directions of Artificial Intelligence (AI)-powered smart bandages.