Van der Waals layered transition metal halides Nb₃X₈ (X = Cl, Br, I) constitute a class of strongly correlated quantum materials featuring a unique breathing kagome lattice structure. Owing to strong Nb–Nb metallic bonding, the system exhibits pronounced intra-layer Nb₃ trimerization and inter-layer dimerization, extending the conventional atomic-scale Mott transition and obstructed atomic insulator physics to the cluster scale and thereby manifesting rich physical implications. This review systematically summarizes the research progress on the Nb₃X₈ family, with emphasis on their lattice structures, electronic spectra, coupling among multiple physical degrees of freedom, and device applications. Regarding the lattice and electronic structures, we analyze the potential of the high-temperature α phase as a cluster Mott insulator for exploring quantum spin liquids, as well as the layer-number parity dependence and correlated surface state characteristics exhibited by the low-temperature β phase as an obstructed atomic insulator (OAI). In the context of state manipulation, we summarize novel elementary excitations such as “breathing ferroelectricity”and chiral phonons derived from the flat-band electronic structure and breathing-mode distortion, together with the current status of research on the coupling control of the Mott gap and triferroicity (ferromagnetism, ferroelectricity, ferrovalley) via external stimuli such as pressure and electric field. Finally, we outline prospects for applications of van der Waals heterostructures based on this system in areas such as ultra-broadband infrared detection, topological quantum computation, and field-free superconducting diodes. This material platform not only provides an ideal venue for investigating strong correlation effects and topological quantum chemistry, but also opens a new pathway for developing next-generation low-power, multifunctional quantum devices.