Poor water solubility of many drugs has emerged as one of the major challenges in the pharmaceutical world. Polymer-based amorphous solid dispersions have been considered as the major advancement in overcoming limited aqueous solubility and oral absorption issues. The principle drawback of this approach is that they can lack necessary stability and revert to the crystalline form on storage. Significant upfront development is, therefore, required to generate stable amorphous formulations. A thorough understanding of the processes occurring at a molecular level is imperative for the rational design of amorphous solid dispersion products. This review attempts to address the critical molecular and thermodynamic aspects governing the physicochemical properties of such systems. A brief introduction to Biopharmaceutical Classification System, solid dispersions, glass transition, and solubility advantage of amorphous drugs is provided. The objective of this review is to weigh the current understanding of solid dispersion chemistry and to critically review the theoretical, technical, and molecular aspects of solid dispersions (amorphization and crystallization) and potential advantage of polymers (stabilization and solubilization) as inert, hydrophilic, pharmaceutical carrier matrices. In addition, different preformulation tools for the rational selection of polymers, state-of-the-art techniques for preparation and characterization of polymeric amorphous solid dispersions, and drug supersaturation in gastric media are also discussed.