The integration of human–machine intelligence in manufacturing is transforming operational efficiency, decision-making, and workforce collaboration. As Industry 4.0 progresses toward Industry 5.0, the need for a human-centered approach is becoming increasingly apparent. This review explores the state-of-the-art advancements in Augmented Reality (AR) and its role in bridging the gap between human operators and intelligent manufacturing systems. AR enhances real-time decision-making by overlaying contextual information, improving situational awareness, and facilitating seamless interaction between humans and digital systems. This paper synthesizes current applications of AR in assembly guidance, maintenance, quality control, and operator training, while also discussing its integration with Artificial Intelligence (AI) and digital twins to create more adaptive and predictive manufacturing environments. Additionally, key technological challenges—such as usability, scalability, workforce adaptation, and security concerns—are analyzed, alongside recommendations for addressing these barriers. The discussion extends to emerging research directions, emphasizing sustainability, Extended Reality (XR), and human–robot collaboration as pivotal areas for future exploration. By examining the evolution from Industry 4.0 to Industry 5.0, this review highlights how AR and human–machine intelligence are shaping the future of smart, sustainable, and human-centered manufacturing. The findings offer a comprehensive perspective on leveraging AR to enhance adaptability, efficiency, and long-term resilience in industrial settings.