This paper explains the working of the conversational AI models and their characteristic features. The primary objective of this paper is to let the readers know about what topical chats are and how they work. Topical chats have huge data/knowledge stored in them for making the conversation interactive and engaging with humans. The first-generation conversational AI models were simply focused on short task-oriented dialogs, such as telling jokes, the weather of the day, or playing songs. But now advanced models can have everyday smooth conversations. These models are built to understand different languages and their different accents. These models can identify whether the user is female/male/other, detect the change in the user's emotion during the conversation and switch the topic of discussion accordingly. Building a conversational AI model has been a challenging task for researchers as well as the developers as they require deep knowledge in NLU, ASR, LM, Semantics, etc. Understanding human emotions and sentiments is a difficult task for an AI model. Recognizing the speech and giving a sensible response is challenging too. But nowadays AI models are so developed that they can even differentiate between good words and slang words.