A brief historical perspective on metagenomics is given followed by a discussion of the rapid progress in this field largely defined by transition to the next generation sequencing technologies. Problems and challenges connected to this transition are also addressed. The review focuses on recent literature describing metagenomic approaches connecting sequence information to functionality that are especially relevant to biotechnological applications, including metagenomics of specialized or enriched microbial communities, metagenomics combined with specific labeling techniques, metatranscriptomics and metaproteomics.