With the emergence of Information and Communication Technologies (ICT) and wireless embedded sensing devices into modern vehicles, Intelligent Transport System (ITS) becomes a reality and an indispensable component of smart cities. The purpose of ITS is to improve road safety and traffic efficiency as well as offering infotainments services. In fact, warning drivers in the right time about dangerous situations on the road and providing them with prior information about traffic will undoubtedly leads to enhance driver's safety and reduce traffic congestion. Technically speaking, ITS is based on self-organizing wireless networks, known as vehicular ad-hoc networks (VANETs). Mobile vehicles in VANET might play the role of stationary sensors in infrastructure-based networks. They can detect, gather and disseminate real-time data about traffic, driving conditions and potential hazards on roads. In this respect, we review in this study, recent developments on the design of VANET protocols and applications. We first introduce the architecture of VANETs then we review their unique characteristics and applications. Thereafter, we discuss the main research challenges and open issues to be considered for designing efficient and a cost-effective VANET protocols and applications.