Minimizing the negative effects of the manufacturing process on the environment, employees, and costs while maintaining machining accuracy has long been a pursuit of the manufacturing industry. Currently, the nanofluid minimum quantity lubrication (NMQL) used in cutting and grinding has been studied as a useful technique for enhancing machinability and empowering sustainability. Previous reviews have concluded the beneficial effects of NMQL on the machining process and the factors affecting them, including nanofluid volume fraction and nanoparticle species. Nevertheless, the summary of the machining mechanism and performance evaluation of NMQL in processing different materials is deficient, which limits preparation of process specifications and popularity in factories. To fill this gap, this paper concentrates on the comprehensive assessment of processability based on tribological, thermal, and machined surface quality aspects for nanofluids. The present work attempts to reveal the mechanism of nanofluids in processing different materials from the viewpoint of nanofluids’ physicochemical properties and atomization performance. Firstly, the present study contrasts the distinctions in structure and functional mechanisms between different types of base fluids and nanoparticle molecules, providing a comprehensive and quantitative comparative assessment for the preparation of nanofluids. Secondly, this paper reviews the factors and theoretical models that affect the stability and various thermophysical properties of nanofluids, revealing that nanoparticles endow nanofluids with unique lubrication and heat transfer mechanisms. Finally, the mapping relationship between the parameters of nanofluids and material cutting performance has been analyzed, providing theoretical guidance and technical support for the industrial application and scientific research of nanofluids.