Powder-based additive manufacturing (AM) technologies have been evaluated for use in different fields of application (aerospace, medical, etc.). Ideally, AM parts should be at least equivalent, or preferably better quality than conventionally produced parts. Manufacturing defects and their effects on the quality and performance of AM parts are a currently a major concern. It is essential to understand the defect types, their generation mechanisms, and the detection methodologies for mechanical properties evaluation and quality control. We consider the various types of microstructural features or defects, their generation mechanisms, their effect on bulk properties and the capability of existing characterisation methodologies for powder based AM parts in this work. Methods of in-situ non-destructive evaluation and the influence of defects on mechanical properties and design considerations are also reviewed. Together, these provide a framework to understand the relevant machine and material parameters, optimise the process and production, and select appropriate characterisation methods.