Abstract: The Distributed Smart Grid (DSG) is crucial in constructing new power systems in the background of carbon peaking and carbon neutrality goals. It is essential for advancing new power systems towards clean, low-carbon, safe, sufficient, economical, efficient, coordinated supply and demand, and flexible, intelligent operations. This paper synthesizes the current domestic and international development status, analyzes the development trends and new characteristics of generation, grid, load, and storage in new power systems, and summarizes the challenges brought by new development trends that the DSG needs to overcome. Subsequently, the paper outlines the connotation of the DSG and elaborates on its technical characteristics. The core lies in the intelligent reconfiguration of the existing power grid, and it specifically discusses the organizational structure, grid framework, and control architecture of the DSG. Furthermore, the paper summarizes the theoretical framework of the DSG from three levels: distributed unit modeling and coordination, distributed cluster division and interaction, and distributed power grid optimization and control, and expounds new theories applicable to the DSG. It also explores the technical development directions of the DSG from three layers: physical, information, and value, forming a technological framework for the DSG.