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Deformation twins and phase interface are important planar defects and microstructures that greatly influence the overall performance of a material system. In multi-layer thin-film heterostructures, their effect is more manifest due to the small dimension of thin films and their influence on the growth of multi-layer structures. This article reviews the recent progress in microstructure and defects observed in thin film heterostructures, serving as a guideline for future research in this field. The multilayer thin-film heterostructures studied here were grown by pulsed laser deposition technique. Microstructures and defects were investigated by Transmission Electron Microscopy.