The Digital Twins (DT) have emerged as the technology that provides capabilities to simulate and analyze cyber-physical systems’ behaviors using digital replicas. This is achieved through high-fidelity digital models, bi-directional communication and (near) real-time data exchange between physical real-world systems and DTs. Despite its capabilities of facilitating real-time monitoring, optimization, and predicting system performance, effectively leveraging DT for power system applications requires integrating data from heterogeneous sources and addressing various data related aspects. These include data modeling, exchange and interoperability. One promising concept to address these aspects is that of data federation which promotes interoperability, allowing DTs to operate autonomously, yet interact seamlessly. While various studies in literature have addressed DT applications, technologies, and challenges, a comprehensive review on the data federation aspects within power systems still needs to be investigated. This research seeks to bridge this gap by providing an in-depth review of DT practices in academia and industry, functional and non-functional requirements, and enabling technologies, with emphasis on data federation. Its role in enhancing system-wide interoperability in the power system, along with associated challenges are summarized and discussed.